Strategic Alignment: Is it linked with a payoff from I.T. Investment?

14 Nov

In my last blog I covered Misalignment as a challenge of Strategic Alignment;

In this blog I am going to examine the two divided sides of if there is a payoff from I.T. Investment when linked with strategic alignment. The question of  I.T. investment and what returns a company can benefit from it, is one that has many people divided. In this article ‘The leveraging influence of strategic alignment on IT investment: An empirical examination’ written by Byrd, Lewis and Bryan, they discuss the influence strategic alignment can have on the payoff of I.T. investment. They indicate that there are significant links between IT Investment and Performance, Strategic Alignment and Performance and Strategic Alignment and IT investment. This is a framework which has been developed by Lim, Richardson and Roberts (2004).

In this article they state that “the alignment of IS and business strategy should facilitate more rational investments in IT and reduce improvident spending”. I found an interesting book called ‘Creating Business Value with Information Technology: Challenges and Solution’ By Namchul Shin, in the first chapter Tallon and Kraemer analyse the relationship between Strategic Alignment and Business I.T. They outline that previous research has come to the conclusion that I.T. payoffs are a function of strategic alignment, that a deficiency in payoffs from I.T. may be in fact because of a misalignment between business and I.T. strategies.  If this is the case and strategic alignment is such a key factor in gaining I.T. investment then it shows how beneficial it can be for a business.

In contrast with this Jarvenpaa and Ives (1994) argue that increased strategic alignment may weaken a business’s ability to respond to “environmental threats and opportunities”, thus leading to an inflexibility which could lower any returns on investments made in I.T. By making this point the article suggests that this could lead to an “Alignment Paradox” within the company.

Which side would you take? Do you think that such a thing as an “Alignment Paradox” exists?


9 Responses to “Strategic Alignment: Is it linked with a payoff from I.T. Investment?”

  1. d112221671 November 14, 2012 at 9:00 pm #

    Hi 04ac, really good blog to get a discussion going! To get it started I think that I would definitely disagree with Jarvenpaa and Ives (1994). I don’t think that a strategic alignment is so rigid that it would lead to such inflexibility as mentioned above. I would have thought that the strategy aspect would mean that, for any plan, a map of the environment and the competitors would be completed by using traditional strategy frameworks such as Porter’s five forces or a S.W.O.T analysis so that such environmental threats and opportunities would be taken into account in the business-IS strategy.

    What are your own thoughts on this? Would you agree that there is an “alignment paradox”?

  2. cmcoughlan November 14, 2012 at 9:38 pm #

    I also disagree with Jarvenpaa and Ives. As d112221671 has said, the role of strategy is to help a business to defend itself against market forces and competition and to help businesses to be more agile and flexible. Thus, I think quite the opposite is true ; that strategic alignment helps a company to be more flexible and better cope with competition.

    • 04ac November 15, 2012 at 7:36 pm #

      I would be also on the same page of disagreeing with Jarvenpaa and Ives, I did think it was an interesting take on strategic alignment though and did find it an interesting argument to outline an ‘Alignment Paradox’. Even if there is a little bit of truth in their beliefs, d112221671 you make a good point of how the strategy process would have covered ‘a map of the environment and the competitors’ would have been outlined’.

  3. agblogail November 16, 2012 at 12:51 pm #

    I would have to disagree with Jarvenpaa and Ives also, I think the strategic alignment section of the blogs has consistently shown us of the importance and benefits of strategic alignment and IT. I would like to read more on this “alignment paradox” theory though.

  4. thestrategicblogger November 19, 2012 at 1:11 am #

    Yes the alignment paradox question does shift the argument surrounding the importance of strategic alignment in a different direction however I do feel Jarvenpaa and Ives are placing too heavy an emphasis on being able to respond quickly to weaknesses and opportunities. Many now believe first mover advantage is overrated. If this is the case then the alignment paradox is debunked

  5. d112221671 November 20, 2012 at 7:26 pm #

    Thanks for the response 04ac, great to hear all the different ideas on this topic!

  6. 04ac November 21, 2012 at 6:56 pm #

    Interesting to see peoples reactions to Jarvenpaa and Ives and the idea they have of an alignment paradox, but as you point out ag blogail when reading about strategic alignment the overall theme that comes through is of its importance to a business which leads me to agree with you strategic blogger that maybe it is a debunked concept?!


  1. Possible Arguments against Strategic Alignment. « So Opinionated … - November 23, 2012

    […] Another drawback as mentioned is that it is not easy to implement as strategy is not a clear concept and may change due to environmental unpredicted changes (Ciborra, 1997). Another Also, Sabherwal et al. (2001) and Vitaleet al. (1986) suggested that alignment may constrict organisational ability to quickly react to changes in the external environment. It is necessary to keep in mind that working towards a predetermined or fixed outcomes can be unrealistic due to these continuous changes. Sabherwal et al. (2001) also suggested that a company may suffer from complacency after an initial short term success.  (Arafat, 2007) This idea was previously mentioned by 04ac (…). […]

  2. Strategic Alignment: Why even bother?? « So Opinionated … - November 24, 2012

    […] highlights how Strategic Alignment has been around since the 1980’s and how it has managed to help businesses realise what benefits they could gain from IT investments; as I previously discussed in my blog:… […]

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