Modelling and measuring relationships between IT-business strategic alignment and performance outcomes

This is a study on the relationships between information technology (IT) as an enabler of corporate strategy implementation and the impact of IT on competitive advantages on companies in Australia. The main purpose of this study was to increase our knowledge of the influences of IT and business strategy alignment (in short, IT-business strategic alignment) upon the competitive performance of Australian companies. The core objective of this research was to develop an IT-business strategic alignment measurement model (termed CSA model) and its associated measurement methodology that is practical and easy to use by the business for better decision making in the realm of IT-business strategic alignment. The second objective of the research was to test the CSA model. To achieve this, data from 37 Australian manufacturing companies were studied. Variables developed in the CSA model were analysed using descriptive and inferential statistical methods commonly used by business. The outcomes of the data analysis related to: the strength of IT-business strategic alignment at corporate strategy, business processes and business operations planning levels within Australian manufacturing companies; the contribution of IT-business strategic alignment on organisational performance; whether there were positive relationships between IT-business strategic alignment and business performance outcomes. Among the steps involved in building the CSA model and subsequently testing it were: conducting a detailed study of and reporting on concurrent IT-business strategic alignment practices and literature; defining and developing measures for the IT-business strategic alignment construct; defining and developing measures for the impact of IT-business strategic alignment on organisational performance; assessing the relationships between the degree of IT-business strategic alignment and its contribution to organisational performance; and testing the hypotheses that there are associations between IT-business alignment and the business performance outcomes. The results of the analysis showed that IT-business strategic alignment at corporate strategy planning stage is somewhat incoherent but is adequate at business process/operations planning level. This study also showed that contrary to popular belief, even though IT-business strategic alignment has direct impact on five out of ten key competitive advantages commonly cited, namely 'customer service', 'product quality', 'product/service leadership', 'revenue gain' and 'cost saving', a high degree of IT-business strategic alignment has no positive relationship with these competitive advantages with the exception of 'customer service' and 'product quality'.