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1 Master thesis Business Contribution to Successful Business-IT Alignment Jesse Piscaer SN: University of Amsterdam Faculty of Science Information Studies: Business Information Systems Final version: August 20, 2013 Supervisor: Prof. dr. Tom M. van Engers

2 Master thesis Business Contribution to Successful Business-IT Alignment University of Amsterdam, Netherlands Faculty of Science Information Studies: Business Information Systems PREFACE We all know organizations where the IT department is underexposed and does not have a visible contribution to business performance. The department that fixes your computer, gets you the proper authorizations, or you reach out to when the application you are using is broken. The majority of the organizations cannot survive without a proper IT landscape in today s competitive marketplace. This demands business and IT to be properly aligned to mutually support each other, Business-IT alignment. Traditionally, it has been said that IT should support the business to the fullest. But, how does the business make sure that IT can fully support them? This thesis researches the Business Contribution to Successful Business-IT Alignment, and was conducted in two sectors in the Netherlands: banking and health care. Quint Wellington Redwood facilitated this research and was primarily interest in the question: what does the business to make IT successful? rather than what does IT to make the business successful? which complements my personal interest on the Business-IT alignment topic and was used as a starting point for this research. It was aimed to prepare this thesis for a scientific publication; therefore a scientific article template was used for this thesis. Enjoy reading! Jesse Piscaer August 20,

3 TABLE OF CONTENTS 1! Introduction 4! 2! Business-IT alignment 5! 2.1! Importance of Business-IT alignment 5! 2.2! A definition 5! 2.3! Business-IT alignment models 6! 2.3.1! Strategic Alignment Model 6! ! Alignment between four domains 7! ! Four alignment perspectives 7! ! Criticism on the Strategic Alignment Model 8! 2.3.2! Generic framework 8! 2.4! Business-IT alignment success factors 9! 2.5! Business-IT alignment maturity 9! 2.6! Summary 9! 2.7! Criticism 10! 3! Research approach 10! 3.1! Relevance and objectives 10! 3.2! Research questions 10! 3.3! Research design 11! 4! Identifying most important Business-IT alignment success factors 12! 4.1! Selecting business Business-IT alignment success factors 12! 4.2! The 10 most important success factors 13! 5! How Business-IT alignment success factors are utilized in practice 13! 5.1! Introduction 13! 5.2! Interview approach 13! 5.2.1! Semi-structured interview 13! 5.2.2! Development of interview structure and questions 13! 5.2.3! Participant selection 14! 5.2.4! Data collection 14! 5.2.5! Data analysis 14! 5.3! Interview results 14! 5.4! Conclusion 15! 6! Factors leading to successful Business-IT alignment 16! 6.1! Introduction 16! 6.2! Analysis approach 16! 6.3! Measure Business-IT alignment maturity 16! 6.4! Factors leading to successful Business-IT alignment 16! 6.5! Conclusion 17! 7! Banking and health care 17! 7.1! Business-IT alignment maturity 17! 7.2! Presence of total sub-factors 17! 7.3! Conclusion 18! 8! Conclusion 18! 8.1! How and to which extent Business-IT alignment success factors are utilized in practice 18! 8.2! Other findings 18! 8.3! Limitations 19! 8.4! Further research 19! Acknowledgements 19! Bibliography 20! Appendix A Factors contributing to Business-IT alignment 23! Appendix B Rating Business-IT alignment factors (Questionnaire) 28! Appendix C Most important Business-IT factors according to experts 30! Appendix D Interview outline 32! Appendix E Interview summaries 34! Appendix F Combining the factors utilized in practice 56! Appendix G - Business-IT alignment maturity questionnaire 64! Appendix H - Factors leading to successful Business-IT alignment 69! Appendix I Difference between banking and health care 85! 3

4 Business Contribution to Successful Business-IT Alignment Jesse Piscaer Master thesis, University of Amsterdam, Netherlands Faculty of Science Information Studies: Business Information Systems ABSTRACT: Business-IT alignment (BITa) has become essential to increase organizational performance. Yet, achieving successful BITa continues to be a major concern for organizations. The majority of the BITa literature approaches BITa from an IT perspective and makes BITa an IT responsibility. But, how does the business contribute to successful BITa? Critical BITa success factors identified by existing literature, lack insight in how they are utilized in practice, which makes them difficult to use by organizations. This research gives insight on how existing BITa success factors, applicable to the business, are utilized in practice, by composing sub-factors. Furthermore, it identifies which sub-factors contribute significantly to BITa maturity. The research was conducted in two sectors in the Netherlands, (1) banking in which IT is used in their primary processes, and (2) health care sector in which IT usually is used in their secondary processes. As a result, the research found 30 new sub-factors, which explain how 10 existing BITa success factors identified by literature are utilized in practice. Statistical analysis shows that 12 of these 30 sub-factors contribute significantly to successful BITa. Moreover, the research shows a significant difference in BITa maturity between banking and health care organizations, in favor of banking. Key words: Business-IT alignment, Business-IT alignment success factors, Business-IT alignment maturity, banking, health care. 1 INTRODUCTION The impact of information technology (IT) on doing business has increased noticeably during the last decades (Sabherwal & Chan, 2001). New technology disrupts industries and the way we do business. Mastering these new technologies may be the key to long-term survival and success, according to a recent McKinsey study (Willmott, 2013). Alignment between business and IT has become essential to increase organizational performance (Chan, et al., 1997). This alignment can be conceptualized as Business-IT alignment (BITa), which can be defined as business and IT working together to reach a common goal (Campbell, 2005). Numerous surveys have highlighted the alignment between business and IT as a top priority for IT executives since at least 1980 (e.g. Niederman, et al., 1991; Luftman & Ben-Zvi, 2011). Researchers have responded by examining the necessity and benefits of aligning IT with the business (e.g. Henderson & Venkatraman, 1993; Broadbent & Weill, 1993; Luftman, et al., 1999; Wageman, 1997). In addition, the 2011 Gartner CIO survey reveals that CIOs perceive their strategies to be intimately connected with business strategies, which is a reflection of IT s objective to get closer to the business to improve BITa (McDonald & Dave, 2011). Several authors indicate top management s commitment to the strategic use of IT as the most critical success factor in aligning business and IT (e.g. Teo & Ang, 1999; Luftman, et al., 1999; Reich & Benbasat, 1996). In BITa it seems clear that business and IT are mutually dependent and might have mutual benefits in achieving successful BITa. This demands effort from both sides and can therefore be considered a joint effort. Despite the majority of BITa literature available, no clear manual exists, explaining how to implement successful BITa. Fortunately, BITa theories, frameworks and models are available as an instrument to establish BITa (e.g. Henderson & Venkatraman, 1993; Maes, et al., 2000). Further, authors have identified enablers and critical success factors for achieving successful BITa (e.g. Wageman, 1997; Chan, 2002; Luftman, et al., 1999) and BITa maturity models are available to measure organizations BITa maturity (e.g. Luftman, 2003). The majority of the BITa research is focused on how the IT organization should align with the business and contribute to successful BITa, which approaches alignment from an IT point of view (e.g. Peppard & Ward, 1999). But, how does the business contribute to successful BITa? Although, current scientific literature identifies success factors for both business and IT to increase BITa maturity, Sabherwal et al. (2001) identifies the need for examining these factors from a business perspective since the success factors remain vague in how they are utilized in practice. 4

5 In an effort to contribute to the knowledge on the business contribution to successful BITa this research was conducted among organizations in two services-providing sectors to answer the question In what ways and to what extent does the business contribute to successful Business-IT alignment in the banking and health care sector? This thesis seeks to contribute to the literature on the business role in BITa by pursuing three specific goals. First, it seeks to provide further insight into business contribution to successful BITa. It aims to do so by getting an understanding on how existing BITa success factors, applicable to the business, are being utilized in practice, by composing sub-factors. Second, it examines the relation between the identified sub-factors and BITa maturity. Finally, in doing so, the thesis also seeks to identify BITa differences between the banking- and health sector in which the study was conducted since a difference in BITa maturity between both sectors was expected. Thus, in examining the business contribution to successful BITa, this research employs both a qualitative- and quantitative approach and builds on existing BITa theories, models, and factors relevant to achieve successful BITa, these factors need further insight in how they are utilized in practice. The thesis is divided into eight chapters. Chapter 2 elaborates on the concept of BITa and BITa models, with the objective to shape the theoretical foundation of this research. Chapter 3 describes the research approach including the research questions. A selection of BITa success factors is provided in chapter 4, this selection will be further examined in how they are utilized in practice by using semistructured interviews. Based on the interview findings, chapter 5 presents how the factors are being utilized in practice, by composing sub-factors. Chapter 6 examines the relationship between the identified sub-factors and BITa maturity. An analysis of the BITa differences between the banking- and health care sector are described in chapter 7. Finally, chapter 8 draws conclusions on the conducted research, identifies limitations and outlines future research directions. 2 BUSINESS-IT ALIGNMENT 2.1 Importance of Business-IT alignment An annual survey conducted by the Society for Information Management (SIM), in a joint effort with different academic leaders, indicates four traditional IT management concerns: BITa, business process re-engineering, IT strategic planning and security and privacy. The study was conducted among IT executives representing 275 SIM organizations. Participants were asked to provide their top three managerial concerns from a list of 23 and their top five application and technology investments from a list of 51 (Luftman & Ben-Zvi, 2011). All four traditional concerns relate to obtaining business related returns from IT. Besides the focus on how IT costs can be directly reduced, another focus has emerged on how to leverage IT to help improve business returns and reduce business expenses. Luftman & Ben-Zvi (2011) states that considering BITa as a long pervasive key IT issue, it is not a question of being aligned versus misaligned, but rather leveraging the opportunities for enhancing the relationship among IT and business organizations to attain demonstrable success. Furthermore, recent academic research shows that BITa maturity has a strong correlation with the organization s performance (Dorociak, 2007). In addition, the 2011 Gartner CIO survey reveals that CIOs perceive their strategies to be intimately connected with business strategies. This is a reflection of their objective to get closer to the business and improve BITa maturity (McDonald & Dave, 2011). Both the SIM- and Gartner survey target the IT executive and makes BITa an IT responsibility. Since business is becoming even more dependent on IT these days, what s the business role in becoming more aligned with IT in order to embrace IT opportunities, and increase business performance? 2.2 A definition The Oxford English Dictionary defines alignment as: arrangement in a straight line or in correct relative positions. Applying the term to this research, the arrangement involves business and IT, which still remains a vague definition. Fervent adherents of BITa admit that the concept is ambiguous (Maes, et al., 2000). This seems odd given the relatively high importance of BITa according to several studies. Various alternative terms exist to refer to the phenomenon of alignment: balance (Henderson & Venkatraman, 1993), coordination (Lederer & Mendelow, 1986), fit (Venkatraman, 1989), linkage (Reich & Benbasat, 1996) and harmony (Woolfe, 1993). These terms all assume to refer to one and the same phenomenon although their actual use does not contribute to its clarification (Maes, et al., 2000). Many publications propose a definition for Business-IT alignment. Luftman et al. (1993) defines BITa as the extent to which the IS strategy supports, and is supported by, the business strategy. Tallon & Kraemer (1999) prefers a shorter version 5

6 of BITa, their definition is the alignment of information systems strategy with business strategy. Both definitions are quite similar on focus and strategic alignment. Reich & Benbasat (2000) examines the concept from a slightly wider perspective in defining BITa as the degree to which the information technology mission, objectives and plans support and are supported by the mission, objective and plans. In general, BITa is defined in an indefinite and vague way, if at all, and many publications avoid pinning down the concept of BITa or fall back to tautological definitions (Maes, et al., 2000). Besides, many authors i.e. Coakley et al. (1996) question the measurability of alignment: if we are not able to measure alignment, then what conclusions can be drawn regarding its effectiveness? In an effort to redefine the concept of BITa, Maes et al. (2000) defines BITa as the continuous process, involving management and design sub-processes, of consciously and coherently interrelating all components of the business IT relationship in order to contribute to the organization s performance over time. BITa is quite often interpreted in two contradictive ways, BITa as an end state and BITa as a process. The concept of BITa as a state is further developed by Luftman et al. (2000), which provides the possibility of measuring BITa maturity. The concept as a process is presented by several authors (e.g. Henderson & Venkatraman, 1993; Maes, et al., 2000). Ciborra (2000) describes BITa as a metaphor of building a bridge between two constantly moving shores, with business and IT on opposite sides. This indicates that business and IT are constantly changing, requiring continuous attention, which makes BITa a persistent challenge calling for a dynamic process approach. In this research the definition of BITa from Maes et al. (2000) is used due to a variety of ways in which this definition is more comprehensive and diverges from previous definitions. First, this definition adopts BITa as a dynamic process, involving continuous adjustments and sees BITa not as a static situation. This view corresponds with the need to the constantly changing environments of both business and IT according to Ciborra (2000). Second, this definition takes the components on the Business-IT relationship into account. It doesn t confine BITa to the strategic level, and intermediate information sharing components at all levels are included. Third, this definition does not restrict BITa to managerial processes, but includes design processes as well. Finally, the definition does not strive for harmony and balance between the different elements of the Business-IT relationship. The researchers assume that consciously introduced and/or sustained lack of balance is the motor of many organizational innovations. 2.3 Business-IT alignment models Through decades, a number of BITa models have been proposed. The two key ones that have attracted most of the attention from researchers are the MIT90s (Morton, 1991) model and the Strategic Alignment Model (SAM) (Henderson & Venkatraman, 1993). In comparison to the elements of the MIT90s framework, the SAM model draws a distinction between the external perspective of IT and the internal focus of IT. This recognizes the potential of IT to both support and shape the business policy, which elevates IT strategy from the traditional role of an internal support mechanism (Henderson & Venkatraman, 1993). Maes et al. (2000) proposed a generic framework for information management. This model is in itself an elaboration of the SAM highlighting two extra axes. The two models, SAM and the generic framework, provide the foundation for this research and will be further explained Strategic Alignment Model Back in 1993, when the model was published, the authors noted that across a wide spectrum of markets and countries, IT was transcending its traditional back office role and was evolving towards a strategic role with the potential not only to support chosen business strategies, but also to shape new business strategies, in supporting this movement they named the model: strategic alignment model (Henderson & Venkatraman, 1993). Moreover, the authors argued that the reason why firms often fail to see value from IT investments is due to lack of alignment between the business and IT strategy in Figure 1. Strategic Alignment Model. 6

7 the firm, and furthermore a lack of a dynamic alignment process ensuring continuous alignment in strategy and implementation between the business and IT organizations. Since the advent of SAM it has been the basis for much scientific research and consulting practices (Avison, et al., 2004). The model (figure 1) is based on two building blocks: strategic fit and functional integration. The former recognizes the need for any strategy to address both external and internal domains. The latter, functional integration, specifically considers how choices made in the IT domain impact (enhance or threaten) those made in the business domain and vice versa (Henderson & Venkatraman, 1993). The external domain is the competitive market in which the business competes. It is concerned with decisions such as product-market offering and the distinctive strategy attributes as well as the range of make versus buy decisions. In contrast, the internal domain is concerned with choices pertaining to the logic of the administrative processes and the specific rationale for the design and redesign of critical business processes such as product delivery, product development, customer service, and total quality Alignment between four domains SAM was intended to support the integration of IT into business by advocating alignment between and within four domains: business strategy, IT strategy, operational infrastructure and processes, and IT infrastructure and processes (Henderson & Venkatraman 1993). Business strategy covers choices that affect the positioning of the organization in the competitive landscape. It deals with the business scope and the organization s strategy to compete in the marketplace. This is viewed in terms of distinctive competences and business governance. Initially, these items refer respectively to attributes of strategy (e.g. pricing and quality) and the mechanisms (e.g. partnerships and strategic alliances) for obtaining competitive advantage (Henderson & Venkatraman, 1993). IT strategy covers three choices that propose the position of the organization in the IT marketplace. Technology scope covers those specific information technologies that support current business strategy initiatives or could shape new initiatives. Systematic competencies covers IT strategy attributes that could contribute positively to the creation of new business strategies or support current business strategies, and IT governance, which is the selection and use of mechanisms for obtaining the required IT competencies (Henderson & Venkatraman, 1993). Operational Infrastructure and processes is defined as the choices concerning the particular internal arrangements supporting the position amongst competitors, such as the management structure and work processes. Three aspects of this domain are relevant: the administration infrastructure such as structure and roles, the (work) processes defining the work flow and its associated information flow and the skills indicating the capability of the organization (Henderson & Venkatraman, 1993). IT infrastructure and processes are defined in terms of the choices relevant to the internal arrangements and the processes that determine the range and types of products and services delivered by IT to the organization. Three aspects are essential: architectures represent choices that define the portfolio of applications, the configuration of hardware, software, and communication, and the data architecture that collectively define the technical infrastructure. Processes represents choices that define the work processes central to the operations of the IS infrastructure such as systems development, maintenance and monitoring and control systems. Skills are choices pertaining to the acquisition, training and development of the knowledge and capabilities to the individual required to effectively manage and operate the infrastructure of the organization (Henderson & Venkatraman, 1993) Four alignment perspectives Figure 2. Four alignment perspectives. Strategic alignment at an organizational level can only occur when three of the four domains are sequentially linked, starting at the anchor domain. This anchor domain is the driving force and is often initiating change. This change initiative is intended 7

8 to address a problem area. The problem area is usually in the second domain, also called pivot domain. The changes in the pivot domain affect a third domain, called the impacted domain. The impacted domain completes the strategic alignment perspective. Henderson et al. (Henderson & Venkatraman, 1993) identified four dominant alignment perspectives which can be used for the analytic understanding of how business and IT can be aligned. The four alignment perspectives, each containing an anchor, pivot and impacted domain are depicted in figure 2 and described below. Perspective one: Strategy execution. This perspective aligns via: business strategy - organizational infrastructure and processes IT infrastructure. This is the traditional perspective in which business strategy drives organizational design, and organizational design determines what IT infrastructure and processes are needed. Top management plays the role of strategy formulator, whereas the role of the IT manager should be that of the strategy implementer. Perspective two: Technology transformation. This perspective aligns via: business strategy IT strategy IT infrastructure. Business strategy formulates the organization s strategy. In this perspective top management should provide a technology vision that would support the chosen business strategy. The role of IT management should be that of technology architect, who designs and implements the required IT infrastructure that is consistent with the IT vision. Perspective three: Competitive potential. This perspective aligns via: IT strategy business strategy organizational infrastructure and processes. Unlike previous perspectives that consider business strategy as given, this perspective allows the adaption of business strategy via emerging IT capabilities, IT strategy is the driver of this alignment perspective. The role of top management is to make this perspective succeed as a business visionary in articulating how the emerging IT competences and functionality as well as changing governance patterns in the IT marketplace would impact the business strategy. Perspective four: Service level. This perspective aligns via: IT strategy - IT infrastructure organizational infrastructure and processes. In this perspective, the role of business strategy is indirect and is viewed as providing the direction to stimulate customer demand. The specific role of top management is to prioritize and articulate how scare resources can be best allocated. The role of the IT manager is, in contracts, the one of executive leadership with the specific task to make the organization succeed within operating guidelines from top management Criticism on the Strategic Alignment Model As a result of the introduction of this model, several authors have criticized or extended this model. Luftman et al. (1999) defined and reviewed the model in a more practical way, although the authors did not enhance the model itself. Focusing on the concept of BITa, they expanded the research to identify enablers and inhibitors in BITa, which are described in chapter 4. Maes et al. (2000) enhanced the SAM, producing the generic framework, which is subject to the next paragraph Generic framework The generic framework is a framework, which is in itself an elaboration of the SAM (Maes, et al., 2000). The framework (figure 3) is a generic framework for investigating and interrelating the different components of information management, and deals with the interrelationship of business, information, communication and technology at the strategic, structural and operational level (Avison, et al., 2004). Maes et al. (2000) added a third vertical and horizontal column to the SAM to reflect the separation of information/communication from technology. This stresses the importance of growing information and information delivery (Avison, et al., 2004). Their main premise is that the use and sharing of information, and not the provision of information, are the real source of competitive advantage. The extension aims to let information sharing act as a buffer between business and technology. The horizontal column splits the internal domain into structural and operational levels. It represents the more long-term architectural components such as competencies and infrastructures of the organization. The vertical column represents both the internal and external information/communication aspects, the interpreting processes of information and communication and knowledge sharing. The vertical column has the role as translator, the finder of a common language between business and technology. Goedvolk et al. (2000) developed a similar framework that focuses on the technical or architectural side of SAM. The architecture framework (IAF) aims to integrate the architectural design of business and IT and enhances Maes in two ways. First, it expands Maes ideas in internal information requirements through adding an additional column. The new information column represents the knowledge, communication and co-ordination of information. Second, it adds a third dimension to the model, which contains specific sub-architecture areas. These prescribe the design of organizational aspects that are the consequence of the introduction of an information system. 8

9 The generic framework and the IAF can be combined to form a unified framework. However, since the majority of the literature departs from SAM and extensions of Maes, this research builds on those two models and leaves IAF out of scope for this research. Moreover, architectural thinking according to IAF might limit the theoretical foundation for this research. Figure 3. Generic framework for Information Management 2.4 Business-IT alignment success factors The concept of BITa has been defined and explained by models such as SAM. BITa addresses both doing the right things (effectiveness), and doing things right (efficiency) (Luftman, et al., 1999). But, how can organizations do the right things and do things right in achieving successful BITa? Alignment between business and IT is not an easy task and knowing which critical success factors to manage will certainly enhance the success of such efforts (Wageman, 1997). Several studies have proposed success factors contributing to successful or mature BITa. These factors were found in current literature. Based on Chan & Reich s (2007) annotated bibliography and articles from well-known authors in the field of BITa (Luftman, et al., 1999; Teo & Ang, 1999; Reich & Benbasat, 2000; Chan, 2002; Kearns & Lederer, 2003; Chan, et al., 2006; Huang & Hu, 2007; De Haes & Van Grembergen, 2008; Broadbent & Weill, 1993; Van Der Zee & De Jong, 1999; Luftman, 2000) were used to compose a list of BITa success factors. For example, some random selected success factors are: CEO and CIO have strong working relationship, well-prioritized IT projects, shared domain knowledge, and the CEO participates in IT planning. A comprehensive list of the identified factors from the 11 articles can be found in appendix A and will be used in this research. 2.5 Business-IT alignment maturity Luftman et al. (1999) has interpreted the practical implications of SAM and has identified the major enablers and inhibitors of BITa, as well as a model capable of assessing BITa maturity: Strategic Alignment Maturity Model (SAMM). This model describes a number of BITa criteria, each on different maturity levels (Luftman, 2000; Luftman, 2003). The six criteria categories in the SAMM model are: communication, competency/value measurement, governance, partnership, scope & architecture and skills. Each criteria category contains a number of factors. For example for the criteria category communication factors are understanding of business by IT or understanding of IT by business. The factors can each be rated on five different options, each representing a maturity level (Luftman, 2000). The average of all criteria determines the maturity level of the organization in terms of strategic alignment. These maturity levels are based on the existing Capability Maturity Model s levels. The SAMM defines five levels of maturity for strategic alignment: initial/ad hoc, committed, established focused, improved/managed and optimized. The model has been successfully tested at more than 50 Global 2000 companies in the US and was subject to a benchmark study, and was updated in 2003 (Luftman, 2003). This validation made the model an instrument of interest to use in this research. Also, no representative alternatives were apparent. Although, this model was used in this research, the validation of this model was out of scope. 2.6 Summary The described phenomena shape the foundation of this research. The importance of successful BITa has been highlighted for a variety of reasons such as increased organizational performance by a mature BITa level. Several models and frameworks framing BITa are used in academic research, consulting practices and organizations. The most important model is the SAM by Henderson & Venkatraman (1993), which is complemented by Maes et al. (2000). These models help to shape the thinking space on how BITa should be conceptualized, which leads to critical success factors to achieve mature BITa. Finally, BITa maturity can be measured with SAMM. 9

10 2.7 Criticism As described in paragraph 2.2, BITa is a muchdebated topic. Several critics are circulating about BITa such as the criticism of Maes et al. (2000), who tries to redefine BITa in a more comprehensive definition. Moreover, the measurability of BITa maturity might be close to impossible without a comprehensive definition of BITa (Ciborra, 1997; Maes, et al., 2000). Concisely worded, BITa frameworks, definitions, maturity models and critical success factors could assist organizations to position BITa as a strategic objective, however the important how to achieve successful BITa question remains unanswered and calls for further research on how existing BITa success factors are being utilized in practice. 3 RESEARCH APPROACH 3.1 Relevance and objectives Having experience in the software development lifecycle I was involved in BITa processes. From my personal experience, alignment between business and IT was usually IT s responsibility. From my perspective it seems that the business thinks of IT as something difficult and leaves organizational challenges regarding IT to the IT department rather than actively collaborating with IT to solve the challenges. This triggered me to study the business role in achieving successful BITa. Quint Wellington Redwood, an independent consulting firm in the field of business and IT, has seen the struggle organizations have in aligning business and IT, especially how the business can contribute to successful BITa. Based on the common interest in this topic, they facilitated this research. A lot of research has been conducted on BITa, for example Chan & Reich (2007) summarized 150 important BITa articles up to The literature identifies the importance of the mutual effort needed to increase BITa maturity in an effort to increase organizational performance. Several studies propose models and success factors to increase BITa maturity (Henderson & Venkatraman, 1993; Broadbent & Weill, 1993; Luftman & Brier, 1999; Luftman, 2000; Luftman, et al., 1999). However, the proposed success factors identified by literature remain vague for practice in business and need further explanation (Campbell, 2005). The objective of this research was to examine how existing success factors, applicable to the business, are utilized in practice. For example, literature suggests the factor senior executives support for IT, which is a factor leaving out how this is accomplished and demands further explanation for using it in practice. The results of this research should contribute to existing BITa literature and provide a practical explanation of how existing BITa success factors are utilized in practice, which should help organizations to improve BITa and might simplify the implementation of these factors. 3.2 Research questions To provide insight on how existing business success factors are utilized in practice and contribute to successful BITa the following main research question was answered in this research. In what ways and to what extent does the business contribute to successful Business-IT alignment in the banking and health care sector? The in what ways of the research question covers a qualitative study focused on getting insight on how existing business BITa success factors, identified from literature, are utilized in practice by composing sub-factors. To what extent covers a quantitative study focusing on the actual contribution of the newly identified sub-factors from the qualitative study to BITa maturity. The term business entails executives, managers and employees working in the primary process of the organization. In order to answer the main research question, four sub-research questions were formulated. 1. What entails Business-IT alignment, Business- IT alignment maturity and Business-IT alignment success? This research entails the concepts: Business-IT alignment, Business-IT alignment maturity and success, and Business-IT alignment success factors. This question has already been answered in chapter 2, furthermore these concepts provide the theoretical foundation of this research. 2. How are existing Business-IT alignment success factors applicable to the business utilized in practice? According to literature top executive commitment is one of the critical success factors contributing to successful BITa. But, what does this factor mean and how is it utilized in practice? Interviews were used to identify how existing BITa success factors applicable to the business are utilized in practice. 10

11 3. Which newly identified sub-factors contribute significantly to Business-IT alignment maturity? The interview results provided insight into how existing success factors were utilized in practice, resulting in sub-factors. These sub-factors were statistically analyzed to determine the contribution of the sub-factors to BITa maturity. 4. Is there a difference in BITa between the banking sector and the health care sector? The research was conducted in the banking- and health sector. Differences in BITa were expected between organizations using IT in their primary processes (banks) and organizations usually using IT in their secondary processes (health care). Also, it was expected that in organizations whereas IT is mainly involved in the primary process, the business is more involved in contributing to successful BITa. In addition, it was decided to study two different sectors to develop scientific knowledge on the studied constructs in both sectors. It was aimed to develop generic knowledge to increase the generalizability of this research over at least two sectors. 3.3 Research design The identification of how existing BITa success factors, applicable to the business, are utilized in practice and how they contribute to successful BITa required both a qualitative and quantitative study, a mixed design research type was therefore chosen. Four broad steps were involved in this research: (1) building literature foundation; (2) qualitative study: getting insight into how existing factors by the business are utilized in practice; (3) quantitative study: examining relation between sub-factors and BITa maturity; and (4) drawing conclusions. These steps, and the specific activities within each step, are summarized in figure 4 and discussed briefly below. Step 1. Building literature foundation. Recognizing that existing literature provides the foundation for this research, an extensive literature review was conducted. The completeness of the scientific articles used in this research is one of the aspects contributing to the quality of this research. Three search strategies were used to gather relevant articles. First, Figure 4. Research approach Step 1. Building literature foundation. Step 2. Qualitative study: getting insight into how existing factors by the business are utilized in practice. Step 3. Quantitative study: examining relation between subfactors and BITa maturity. Step 4. Drawing conclusions. 1: Build theoretical foundation ( 2) 2.1: Identify factors using questionnaire ( 4) 3.1: Measure BITa maturity ( 6.3) 4: Drawing conclusions ( 8) BITa definitions BITa frameworks BITa maturity and success BITa success factors Conduct questionnaire among experts to extract most important factors. 2.2: Formulate interview questions ( 5.2) Objective: identify how BITa factors are being utilized in practice. Systematically formulate interview questions. Pre-test semi-structured interviews. 2.3: Conduct interviews ( 5.2) Conduct interviews among 14 organizations in banking and health care.sector. For each interview the BITa maturity of the organization was measured. 3.2: Compute relation between new sub-factors and BITa maturity ( 6.4) Correlation was computed between identified sub-factors and BITa maturity using T tests. 3.3: Examine difference between banking- and health sector ( 7) Based on computed correlations and other findings, the differences are analyzed. Conclusion on what ways and to what extent the business contributes to successful BITa. 2.4: Analyze interviews ( 5.3) Systematically analyze and extract utilized factors from interviews. 11

12 the annotated bibliography of Chan & Reich (2007) was used, providing summaries of 150 BITa articles. Second, searches for well-known authors in the field of BITa were conducted, also the main selection criteria was the relevance of the articles for this research. Finally, articles were found using the socalled snowball methodology. Chapter two of this research contains the theoretical foundation, which covers BITa definitions, frameworks, success factors, and BITa maturity. High BITa maturity is expressed as successful BITa. A specific focus has been given to how existing BITa success factors are utilized in practice. Step 2. Qualitative study: getting insight into how existing factors, by the business, are utilized in practice. This step covers the qualitative study of this research, which entails four activities. In the first activity (2.1), the 10 most important factors extracted from literature were identified using a questionnaire ( 4). Based on the 10 most important factors, interview questions were systematically developed in activity 2.2 ( 5.2). In activity 2.3, interviews were conducted among banks and organizations in the health care sector ( 5.2). Activity 2.4 covers the analysis of the conducted interviews, which can be found in 5.3. Step 3. Quantitative study: examining relation between sub-factors and BITa maturity. The objective of this step was to examine which sub-factors, identified from the interviews, do have a positive impact on BITa maturity. In activity 3.1, BITa maturity was measured among interview participants ( 6.3). Based on the identified sub-factors and BITa maturity, statistical analysis computed relations between the sub-factors and BITa maturity ( 6.4). Finally, in activity 3.3 the banking and health care sector were examined and compared ( 7). Step 4. Drawing conclusions. Based on the conducted research determining how BITa factors, performed by the business, were utilized in practice and how these newly identified sub-factors correlate with BITa maturity a conclusion was drawn, including limitations, and possibilities for further research. 4 IDENTIFYING MOST IMPORTANT BUSINESS-IT ALIGNMENT SUCCESS FACTORS 4.1 Selecting business Business-IT alignment success factors In paragraph 2.5 BITa success factors were described, resulting in 110 unique success factors extracted from literature. This is a relatively high number to study within the limited timeframe of this research. Therefore, it was decided to focus on at least 10 of the most important BITa factors. Since the 110 identified factors contain both business and IT factors, allocation of the factors to either business or IT was pursued by a systematic approach. First, the factors were provided with a unique code for convenient referencing purposes. Second, the factors were each allocated to the categories: business, IT or business/it based on the factor s responsibility with the objective to identify factors applicable to the business. For example the factor Understanding of business by IT is a factor implying responsibility for IT to get a better understanding of the business. This factor was therefore allocated to IT. Third, based on the previous allocation, the factors were assessed on whether they were indirectly or directly applicable to the business. For example the former factor Understanding of business by IT suggests IT responsibility, but might demand the business to help IT in getting an understanding of what the business does, the factor is therefore business indirect responsibility. This analysis can be found in appendix A. As a result of the analysis, 77 factors applicable to the business were identified. In order to identify the 10 most important success factors a questionnaire was developed containing 77 factors, the questionnaire can be found in appendix B. The 77 factors were randomly ordered, to prevent the possibility of tracing back the natural order, proposed by the authors. To determine the 10 most important factors out of the 77, 11 Quint Wellington Redwood experts # Code Factor Mean (n=11) Variance 1 LFT Senior executive support for IT REI Level of communication between business and IT executives TEO Top management is committed to the strategic use of IT LFT IT involved in strategy development LFT Understanding of Business by IT TEO The IS department is responsive to user needs CHN CEO and CIO have a strong working relationship HUA Developing strong relationships between IT and business LFT Understanding of IT by Business TEO Business and IS management work together in partnership in prioritizing applications development Table 1. The 10 most important factors according to experts 12

13 # Codes Factor 1 LFT1999-1, TEO Senior executive support and strategic use of IT 2 LFT2000-1, LFT Mutual understanding between business and IT 3 CHN2002-1, HUA Developing strong relationships between business and IT on both strategic and operational level. 4 LFT1999-2, TEO1999-7, TEO Involving IT in strategy development and working together with the business in prioritizing applications development and being responsive to user needs. 5 REI Level of communication between business and IT executives. Table 2. The most important factors merged into factor categories. in the field of BITa, IT Governance or Information Management rated the factors on relevancy using a five-point scale, ranging from 1 = unimportant to 5 = very important. 4.2 The 10 most important success factors The results of this small questionnaire are displayed in table 1. The table contains the 10 most important BITa factors based on their high mean scores and relatively low variances. A comprehensive overview of the results can be found in appendix C. After all, the most important factors have a mean score 4.09 and do have a relatively low variance compared to other factors having a lower mean score. Three factors, despite having a mean score of 4.0 and relatively low variances, were not included in the list as they covered some of the already selected factors. The remaining factors, each having a mean score below 4.0, were considered less critical than the other factors. Taking a look at table 1, similarities were found among the factors. This seems obvious since several authors suggested factors that are similar. For example factor 1 and 3 of table 1 both indicate the commitment of top management. Based on the found similarities the 10 factors were reduced to 5 unique factors left over for utilization. These 5 unique factors were named factor categories and can be found in table 2. 5 HOW BUSINESS-IT ALIGNMENT SUCCESS FACTORS ARE UTILIZED IN PRACTICE 5.1 Introduction Since the identified BITa success factors are reduced to 5 unique factor categories. Interviews were used to identify new sub-factors within each factor category to provide an explanation on how each factor category is utilized in practice. This chapter discusses how the interviews were developed, conducted and analyzed. As a result, sub-factors are proposed providing insight in how the five factor categories are utilized in practice. 5.2 Interview approach Semi-structured interview As stated earlier, existing BITa success factors lack insight in how they are utilized in practice. This demands for a qualitative study allowing to get an in depth understanding of the existing factors. A semistructured interview approach was therefore chosen, allowing the interviewer to have an interview guide serving as a checklist of topics to be covered and a default wording and order for the questions, but the wording and order were often modified based on the flow of the interview, and additional unplanned questions were asked to follow up on what the participant said (Robson, 2011) Development of interview structure and questions Since interviews play a key role in this research, explicit attention has been paid to the development of the interview structure and questions. For the researcher to get a clear understanding of the organization, all interviews started with the question how the governance structure was implemented. This helped both the researcher and the participant to get on the same page and helped putting the interview questions into context. The interview questions were systematically developed to provide a guided set of questions related to how the factor categories are utilized in practice. To stimulate a more in-depth interview several subquestions were formulated. The formulated interview questions concern facts and behaviors. Facts and behaviors are relatively easy for the participant to get at, although errors can occur due to lapses in memory or to response biases of various kinds (e.g. a business manager talking negative about the IT department, or vice versa). To mitigate this risk, specific things or examples in the present or recent past were asked. In validation of the developed interview questions two testinterviews were conducted to test the interview outline and it helped the researcher to get familiar with the interview outline. The interview outline includ- 13

14 ing the interview questions can be found in appendix D Participant selection Interviews were conducted among 14 organizations, 9 banks and 5 health care institutions, mainly hospitals, and took one hour each. The banking and health sector were chosen, since a difference in how factors are utilized in practice and BITa maturity between those sectors was expected. Participants in the interviews were both business and IT executives to increase reliability. In both cases the business role was still subject to the interview. Participants were contacted via Quint Wellington Redwood s account managers, which provided access to high-level executives in both sectors. Due to privacy reasons the names of the interview participants and organizations are not documented in this research Data collection All interviews were audio recorded and one-on-one between participant and researcher. Afterwards, an anonymously summary of the interview was written by the researcher, subsequently reviewed and approved by the participant to make sure the researcher correctly interpreted the gathered information. The majority of the interviews, 12 out of 14, were held at the participant s working-environment since the researcher did not want any possible commercial thoughts at the Quint office to influence the outcome of the interview. On request of 2 participants the interview was held at the Quint office. The interview summaries can be found in appendix E Data analysis The objective of the interview data analysis was to extract sub-factors or actions explaining how the earlier defined 5 factor categories are utilized in practice. The analysis used a systematic approach consisting of four steps, which are discussed below. First, the interviews were printed and gone through with a yellow marker. All sub-factors or actions, which were initiated by the business and relevant for BITa were highlighted. Second, a fellow student reviewed whether all relevant sub-factors were extracted from the summaries or not, some adjustments were made. Third, the highlighted sub-factors were concretized into correct Dutch, and put in a spreadsheet. For referencing convenience each factor was provided with a unique identifier consisting of the following syntax <sector BNK (bank) or HEA (health care)-<interview number>-<factor in interview>, for example BNK-1-1 refers to interview number 1, which was a bank and the first sub-factor found in the interview summary. Fourth, all extracted sub-factors were allocated to one of the five factor categories by using a printed version of the spreadsheet; each sub-factor was cut out en allocated to one of the five factor categories. As a final step, similar sub-factors were grouped into one sub-factor. This was done by a systematic review approach with a fellow student. Each subfactor was discussed on being in the right factor category and grouped with other sub-factors based a four criteria: (1) each sub-factor should have the same intention, (2) sub-factors address the same phenomena, (3) initiated by the same party, and (4) context of the sub-factor. Some sub-factors were decided not being a sub-factor after all, due to a variety of reasons. For example, the sub-factor was after all initiated by IT and not by business. As a result, 30 unique sub-factors representing how the factor categories are utilized in practice remained and are displayed in table 3. The actual analysis including the underlying factors can be found in appendix F. 5.3 Interview results The interview results provide insight in how the factor categories are utilized in practice. This means that sub-factors, found in the interviews, explain how the factor categories, and therefore the factors identified from literature, are utilized in practice. The following paragraphs provide some randomly selected examples of sub-factors explaining these factor categories. The factor category Senior executive support and strategic use of IT, might mean that BITa is continuously on the agenda of the executive board. It can also mean that a specific executive board member has a dedicated focus on IT. The second factor category Mutual understanding between business and IT, is encouraged by placing the functional management department physically in the same department as the business. But, also the business that actively involves IT in business processes to increase IT s business knowledge. Business being aware of IT s added value might also be critical to a proper mutual understanding between business and IT. The third factor category Developing strong relationships between business and IT on both strategic and operational level can be achieved by actively involving each other in their operation. The business can also be primarily responsible for the business process including IT, which turns out to encourage the relationship between business and IT since the business depends on IT. The forth factor category, Involving IT in strategy development and working together with the busi- 14

15 # Factor 1. Senior executive support and strategic use of IT 1 Business-IT alignment is high and continuously on the agenda of the executive board. 2 Executive board member with a dedicated focus on IT. 3 Executive board member without a dedicated focus on IT, not main responsibility. 4 Executive board considers IT to be an integral part of the organization and has structured it accordingly. 5 Executive board is positive about IT and spreads the message. 6 Executive board is visible on the work floor, able to detect and solve Business-IT alignment problems. 7 The executive board is actively involved in market opportunities based on new technology. 8 Executive board uses IT as an innovation enabler by using a strategy based on the strategic use of new technology. 9 Executive board uses IT as a vehicle for cost reduction. 10 Strategic use of IT to accomplish competitive advantage. 2. Mutual understanding between business and IT 11 Functional management is part of the business. 12 Business and IT realizes they both have the same objectives and are working for the same customer. 13 Business involves IT in business processes to increase IT s business knowledge. 14 Outsourcing and demand-supply organizations forces business to think and formulate requirements. 15 Business is aware of IT s added value. 16 Culture involving respect for each other s knowledge to increase collaboration between business and IT. 17 Support for IT is created due to strategic formulation of accurate objectives. 18 Dedicated department focuses on alignment between business and IT. 3. Developing strong relationships between business and IT on both strategic and operational level. 19 Business and IT find each other easily by involving each other in their operations 20 Business is owner of processes and therefore responsible for IT. 21 Methodology Scrum let s business and IT work closely. 4. Involving IT in strategy development and working together with the business in prioritizing applications development and being responsive to user needs. 22 Clear IT roadmap, partly established by the business, contributes to the IT direction of the organization. 23 Functional changes arise from key-user groups. 24 The business involves IT early in information planning development. 25 Business-IT alignment is a continuous focus in policy plans and strategy. 26 Executive board monitors IT portfolio closely. 5. Level of communication between business and IT executives. 27 Business and IT are both transparent in their communication and plans, resulting in same priorities. 28 Informal organizational structure contributes to increased business-it alignment. 29 Business initiative in formulating new functionalities or IT support. 30 Diluted governance structure increases communication between governance layers, which results in improved alignment. Table 3. How 5 factor categories are utilized in practice. ness in prioritizing applications development and being responsive to user needs, can be utilized to involve IT early in strategic planning, but also monitoring the IT portfolio closely. Finally, the fifth factor category, Level of communication between business and IT executives, by being transparent in their communication about plans might encourage the level of communication. Also, the informal organizational structure turns out to be essential in encouraging the level of communication. A diluted governance structure increases the communication between the governance layers. This also demands more abstract plans to make sure every stakeholder in each governance layer is aware of what s going on. The complete list of sub-factors giving insight on how the factor categories are utilized in practice can be found in table Conclusion This chapter provided an answer to the question How are existing Business-IT alignment success factors applicable to the business utilized in practice?, which was sub-research question 2. Existing BITa success factors were identified in chapter 4 and determined how they are utilized in practice in this chapter. As a result, 30 new sub-factors have been identified which are displayed in table 3. The factor category senior executive support and strategic use of 15

16 IT turns out to contain the most newly identified sub-factors, 10 in total. 6 FACTORS LEADING TO SUCCESSFUL BUSINESS-IT ALIGNMENT 6.1 Introduction Can some of the newly identified sub-factors predict mature BITa? This chapter researches the relation between the identified sub-factors and BITa maturity with the objective to identify which sub-factors are predictors for mature BITa. 6.2 Analysis approach In an effort to identify which factor are predictors for mature BITa a two step approach was performed (1) the interview participants assessed the BITa maturity of their organization, and (2) the relationship with BITa maturity and each sub-factor was analyzed using independent sample T tests. Prior to the tests, a linear regression test was performed to examine whether the identified sub-factors have a relationship with BITa maturity. 6.3 Measure Business-IT alignment maturity BITa maturity was measured using an existing questionnaire by Luftman et al. (2003), which was introduced in chapter 2. The first version of the questionnaire dates from 2000; an updated version was published in The updated version was used in this research and can be found in appendix G. Each interview respondent filled out a copy of the survey, allowing the researcher to connect BITa maturity to the identified sub-factors. The survey contained 37 items covering different BITa criteria. Each criterion has five possible answers regarding the criteria. The answers ranged from an immature answer, given the score of 1, up to a mature answer given the score of 5. The average of all answers provided the BITa maturity of the organization, which obviously was a number between 0 = immature and 5 = very mature. The results of the BITa maturity questionnaire can be found in table 4. Organization Score Bank 1 3,05 Bank 2 3,68 Bank 3 2,51 Bank 4 2,92 Bank 5 3,63 Bank 6 3,51 Bank 7 3,73 Bank 8 3,81 Bank 9 3,05 Health care organization 1 2,05 Health care organization 2 2,59 Health care organization 3 1,86 Health care organization 4 2,43 Health care organization 5 2,22 Table 4. Business-IT alignment maturity among interviewed organizations. 6.4 Factors leading to successful Business-IT alignment Prior to the analysis on which factors lead to successful BITa, it was examined whether the identified sub-factors do have a relation with BITa maturity at all. A linear regression analysis was performed to model the relationship between the dependent variable, BITa maturity, and the independent variable the amount of factors present in an organization. Two hypotheses were therefore formulated: H 0 arguing that the amount of factors present in an organization does not affect BITa maturity, and H 1 arguing that the amount of factors present in an organization does affect BITa maturity. The computed regression model shows a correlation of 0,704, which is relatively high. Performing a F-test on the regression model a P-value of 0,005 was computed, which is less than the significance level of 0,05. Therefore, enough evidence exists to reject H 0, and assume that the amount of sub-factors present in an organization affects BITa maturity positively. The analysis can be found in appendix H. Note: the model presents a regression formula of BITa maturity =0,125 * amount of factors + 2,130. This implies that having zero sub-factors present BITa maturity will be 2,130. Due to the scope of this research, no further research was conducted to clarify this. For each sub-factor identified in chapter 5 it is tested whether its presence significantly contribute to successful BITa. The presence of a sub-factor can basically be divided in two groups, (1) a group of organizations in which the sub-factor is present and (2) a group of organizations in which the sub-factor is not present. This gives the opportunity to compare the BITa maturity means for both groups in order to determine whether a sub-factor significantly contributes to BITa maturity. Therefore, an independent sample T test was performed to test each sub-factor on its significant contribution to successful BITa. Since 30 sub-factors have been identified, the T test was performed thirty times, for each factor separately. The independent variable was the sub-factor, whether the sub-factor was present or not, creating the two groups. The dependent variable was BITa 16

17 # Factor p-value 15 Business is aware of IT s added value. 0,000 6 Executive board is visible on the work floor, able to detect and solve Business-IT alignment problems. 0, Culture involving respect for each other s knowledge to increase collaboration between business and IT. 0, Support for IT is created due to strategic formulation of accurate objectives. 0, Informal organizational structure contributes to increased business-it alignment 0, Dedicated department focuses on alignment between business and IT. 0, Business and IT are both transparent in their communication and plans, resulting in same priorities. 0, Strategic use of IT to accomplish competitive advantage. 0, Business involves IT in business processes to increase IT s business knowledge. 0,003 2 Executive board member with a dedicated focus on IT. 0, Methodology Scrum let s business and IT work closely 0,016 4 Executive board considers IT to be an integral part of the organization and has structured it accordingly. 0,018 Table 5. Factors contributing significantly to Business-IT alignment success. maturity. Two hypothesis were formulated for each factor test: H 0 : µ 1 = µ 2, and H 1 : µ 1 µ 2, in which µ 1 = the mean of BITa maturity of organizations where the factor is present, and µ 2 the mean of BITa maturity of organizations where the factor is not present. For the factors that were only present at one organization, a one-sample T test was performed using H 0 : µ = BITa maturity of the organization with this factor, and H 1 : µ this maturity number to examine whether the mean BITa maturity of the organizations without the sub-factor was significantly lower than the BITa maturity of this one organization. For both tests an alpha of 0.05 was used. These tests were performed one-tailed, due to the fact that these sub-factors where identified as contributors to BITa according to the interview participant. Therefore, it was only tested whether the sub-factors are useful to implement or not, and not whether they might work contradictive. As a result, based on the relatively small dataset, the analysis allows us to reject the 0-hypothesis with 12 of the 30 sub-factors, which means that the average BITA maturity of organizations with this subfactor present is significantly higher than the BITa maturity of organizations without this sub-factor. This implies that these 12 sub-factors contribute to successful BITa. These 12 sub-factors are displayed in table 5 and sorted on their p-value. The complete analysis including SPSS output can be found in appendix H. 6.5 Conclusion This chapter provided an answer to the question Which newly identified sub-factors contribute significantly to Business-IT alignment maturity?, which was sub-research question 3. The performed regression analysis shows that the amount of subfactors present in an organization contributes to successful BITa by increasing BITa maturity. Furthermore, each sub-factor was tested using a T test to determine whether organizations in which the subfactor was present compared to organizations, in which the sub-factor was not present, score significantly higher on BITa maturity. Based on those results it can be assumed that, according to this research, the sub-factors displayed in table 5 significantly contribute to BITa maturity, and therefore BITa success. 7 BANKING AND HEALTH CARE 7.1 Business-IT alignment maturity As stated in chapter 3, it was chosen to study a sector in which IT is part of the primary process, banking, and a sector in which IT is part of the secondary process, health care. Based on the BITa maturity data the difference in BITa maturity was tested using an independent sample T test using an alpha of 0,05. Two hypothesis were formulated: H 0 : µ 1 = µ 2, and H 1 : µ 1 µ 2, in which µ 1 = the mean of BITa maturity in banking (3,32), and µ 2 the mean of BITa maturity in health care organizations (2,23). Because the p- value 0,0 < 0,05 there is enough evidence to reject the H 0 hypothesis. Therefore it can be concluded that BITa maturity in banking is significantly higher than in health care. 7.2 Presence of total sub-factors In addition to previous test, it is expected that banking are having significantly more sub-factors present than health care. Therefore, another independent sample T test was performed using an alpha of 0,05. Two hypothesis were formulated: H 0 : µ 1 = µ 2, and H 1 : µ 1 µ 2, in which µ 1 = the mean of present factors in banking (8,11), and µ 2 the mean of factors of present in health care organizations (3,40). Because 17

18 the p-value 0,0085 < 0,05 there is enough evidence to reject the H 0 hypothesis. Therefore it can be concluded that banking has significantly more subfactors in place than health care. 7.3 Conclusion This relatively small chapter provided an answer to the question Is there a difference in BITa between the banking sector and the health care sector? which was sub-research question 4. The answer to this question is yes. The banking sector scores significantly higher on BITa maturity and has significantly higher amount of sub-factors in place than health care. 8 CONCLUSION 8.1 How and to which extent Business-IT alignment success factors are utilized in practice In this research the question In what ways and to what extent does the business contribute to successful Business-IT alignment? was researched. In order to answer this research question a theoretical foundation was developed in chapter 2 to define the concepts of BITa, BITa maturity and BITa success factors. Experts identified the most important BITa success factors applicable to the business, which were input to the in what ways part of the research question. These factors lacked explanation on how they were utilized in practice. Interviews were conducted to identify how the most important factors were utilized in practice in two sectors, banking and health care. As a result, 30 new sub-factors were identified explaining how the most important BITa factors were utilized in practice. These factors can be found in table 3. Consequently; these 30 subfactors answer the question in what ways the business contribute to successful BITa. The to what extent part of the research question was answered by conducting the analysis of which sub-factors significantly contribute to successful BITa. Each sub-factor was analyzed by a T test differentiating two groups, (1) a group in which the sub-factor was present, and (2) a group in which the sub-factor was not present. As a result, 12 of the 30 sub-factors contribute significantly to BITa maturity, which is a confirmation on the identified sub-factors. Any examples of sub-factors significantly contributing to BITa maturity, which can be found in table 5, are: business is aware of IT s added value, executive board is visible on the work floor, able to detect and solve Business-IT alignment problems and culture involving respect for each other s knowledge to increase collaboration between business and IT. In conclusion, 30 new detailed sub-factors provide more insight in how the business contributes to successful BITa. This can be helpful to both science and organizations to help them improve BITa. The banking and health care sector were subject to this research due to the expected BITa difference between a sector which uses IT in their primarily processes (banking) and organizations using IT in their secondary processes (health care). Statistical analysis shows a significant difference in BITa maturity between banking and health care, as expected, in favor of banking. 8.2 Other findings Besides the findings that help us understand how existing factors are utilized in practice other interesting findings were identified during the interviews. Questions such as what would you like to improve? were asked to identify future factors that might lead to improved BITa. An overview of these findings is described below. In almost all interviews it was highlighted that the business could really make an effort in improving requirements analysis and formulation. Being transparent in their plans and communicate this to IT, to make sure both business and IT are on the same page. By improving communication on business plans to IT, it would really help IT in forecasting what the business expects of IT. Applications that are used by many departments often lack ownership. In practice, this means that no one takes responsibility for the application. As a result, problems might arise concerning maintenance or development. Business should really solve this by making a department or someone primarily responsible for the application. In all IT projects, costs are an important factor, although between banking and health care there are slight differences. In health care, the majority of the IT projects prioritization are on costs only, in some cases that really withholds organizations to exploit the full potential IT has to offer in contributing to the strategic use of the organization. In some organizations it was argued that having a CIO or someone being familiar with IT in the executive board could really boost BITa and using IT as a strategic enabler for innovation. However, in some organizations IT did not have much priority of the executive board due to not having the proper knowledge or experience with IT. For example this caused incomprehension on IT complexity and costs in the executive board. 18

19 IT is often seen as a party that delivers services and technology to the business instead of being a strategic partner involved in strategy planning to exploit IT to the full potential. Early involvement of IT in new business solutions could also be improved. Most often, the business develops new products or services and asks IT to participate later in the process. To exploit the potential of IT, IT should be involved early in the process according to some interview participants. Although, these other findings do not necessarily contribute to how the business currently contributes to successful BITa, it clearly provides deeper insight on how BITa could be improved and highlights the importance of successful BITa. Moreover, it shows the awareness of BITa and the desired improvements in the higher levels of the organization. 8.3 Limitations The study has several limitations, which are important to mention as further research and organizations might depend on the outcomes of this study. A major part of this research was getting insight in how existing BITa success factors were utilized in practice. The questionnaire to identify the most important BITa success factors contains current success factors. However, since the factors are ambiguous, it might have been difficult for the experts to rate each factor on relevancy. The interviews were intended to elaborate on how the most important success factors are utilized in practice. This sometimes was tough since organizations with poor BITa maturity did not have a clue on how the factors were utilized in their organization. The interview analysis was based on some principles. Although, the analysis was conducted with a fellow student, the analysis was still subjective and might result in a different outcome if done by other researchers. However, all data is available which allows other researchers to analyze the data again. The dataset in this study to test whether the subfactors significantly contribute to BITa maturity was relatively small. Probably, more reliable outcomes can be computed with a bigger dataset. BITa maturity among the participants organizations was measured based on an existing questionnaire by Luftman. Due to time constraints the questionnaire was not scientifically validated in this research. Furthermore, each participant, only one per organization, filled out the questionnaire, which might not provide an objective result. It s recommended by the author to conduct the survey among several stakeholders in every organization to assess BITa maturity more accurately. 8.4 Further research Several suggestions for further research are described below without proposing an exhaustive list. Some factors might still be ambiguous and need further explanation on how these sub-factors are utilized in practice. A research could be set up to study the current identified factors more closely. A selected amount of BITa success factors were studied in this research. However, other factors also need further insight on how they are utilized in practice for organizations to be useful. A research could be conducted to study how other BITa success factors are utilized in practice. The presence of the identified sub-factors might be examined among other organizations and correlated with BITa maturity. This could complement the study on the sub-factors contribution to successful BITa. Paragraph 6.4 proposes a regression formula of BITa maturity = 0,125 * amount of factors + 2,130. This formula implies that having zero sub-factors present BITa maturity will still be 2,130. A study could be conducted to clarify this. The study was conducted in the banking and health care sector. The study could be repeated in other sectors to allow benchmarking among sectors. Finally, all other findings, described in paragraph 8.2 might lead to further research. ACKNOWLEDGEMENTS From April 2013 to August 2013 I worked on this research project, to complete my Master s program Information Studies Business Information Systems at the University of Amsterdam. Completing this project wouldn t be possible without the support of a number of people. First of all, I would like to thank all high-level executives who participated in this research. Your input was essential to conduct this research. The interviews were inspiring and some of you got new insights to improve BITa in their organization which was the ultimate implicit goal of this research: mobilizing people to contribute to successful BITa. Second, I would like to thank Quint Wellington Redwood for giving me the opportunity to conduct this research and brining me into contact with the participants. Especially, Ronald Israels for his scientific feedback on this research and Marco van der Haar for mentoring me. Third, I d like to thank my supervisor Tom van Engers for his great feedback and an inspiring year at the University of Amsterdam. 19

20 Finally, last but not least, my girlfriend for reviewing my thesis over and over again. Jesse Piscaer Castricum, August 20, 2013 BIBLIOGRAPHY Avison, D. et al., Using and validating the strategic alignment model. The Journal of Strategic Information Systems, 13(3), pp Broadbent, M. & Weill, P., Improving business and information strategy alignment: Learning from the banking industry. IBM systems journal, 32(1), pp Campbell, B., Alignment: Resolving ambiguity within bounded choices. Chan, Y.E., Why haven't we mastered alignment? The importance of the informal organization structure. MIS Quarterly Executive, 1(2), pp Chan, Y.E. & Reich, B.H., IT alignment: an annotated bibliography. Journal of Information Technology, 22(4), pp Chan, Y.E. et al., Business strategic orientation, information systems strategic orientation, and strategic alignment. Information Systems Research, 8(2), pp Chan, Y.E., Sabherwal, R. & Thatcher, J.B, Antecedents and outcomes of strategic IS alignment: an empirical investigation. IEEE Transactions on Engineering Management, 53(1), pp Ciborra, C., From control to drift: the dynamics of corporate information infrastructures, Oxford University Press. Ciborra, C.U., De profundis? Deconstructing the concept of strategic alignment. Scandinavian journal of information systems, 9, pp Coakley, J.R., Fiegener, M.K. & White, D.M., Assessing Strategic IT Alignment in A Transforming Organisation. Proceedings of the Association for Information Systems, Phoenix Arizona. De Haes, S. & Van Grembergen, W., Practices in IT governance and business/it alignment. Information Systems Control Journal, 2, pp.1 6. Dorociak, J.J., The alignment between business and information system strategies in small banks: An analysis of performance impact, Goedvolk, H. et al., The Design, Development and Deployment of ICT Systems in the 21st Century: Integrated Architecture Framework (IAF). Cap Gemini Ernst and Young. Henderson, J.C. & Venkatraman, N., Strategic alignment: Leveraging information technology for transforming organizations. IBM systems journal, 32(1), pp Huang, C.D. & Hu, Q., Achieving IT- Business Strategic Alignment via Enterprise- Wide Implementation of Balanced Scorecards. Information Systems Management, 24(2), pp Kearns, G.S. & Lederer, A.L., A Resource Based View of Strategic IT Alignment: How Knowledge Sharing Creates Competitive Advantage. Decision Sciences, 34(1), pp Lederer, A.L. & Mendelow, A.L., Issues in information systems planning. Information & management, 10(5), pp Luftman, J., Assessing business-it alignment maturity. Communications of the Association for Information Systems, 4(14), pp Luftman, J., Assessing IT/business alignment. Information Systems Management, 20(4), pp Luftman, J. & Ben-Zvi, T., Key Issues for IT Executives 2011: Cautious optimism in uncertain economic times. MIS Quarterly Executive, 10(4), pp Luftman, J. & Brier, T., Achieving and sustaining business-it alignment. California management review, 42, pp Luftman, J., Papp, R. & Brier, T., Enablers and inhibitors of business-it alignment. Communications of the AIS, 1(3es), p.1. 20

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