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Business and Information Systems Alignment for Competitive Advantage

Research · August 2015

DOI: 10.13140/RG.2.1.3249.8407

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 Business and Information Systems
Alignment for Competitive
Advantage

Author
Karim Ahmed Abdel Karim
M00290498

Supervisor
Dr. Geetha Abeysinghe

January 2013

“A thesis submitted in partial fulfilment of the requirements for the

degree of Master of Science in Business Information Technology.”
Abstract

The evolution of information systems have impacted the lives of almost all humans, we can see this
clearly in our day-to-day activities that became a series of interaction with different forms of
information systems. Organisations invested billions of dollars and will continue to invest aiming to
get the most out of the information systems promise.

Information systems and business strategic alignment is at the heart of information systems
research, being one of the top concerns for information technology executives for years is clearly an
indication of the significance of the topic. The ability of organisations to realise true advantage that
can give it strategic leverage is at the heart and mind of every business leader decides to invest in
information systems.

Strategic alignment research started decades ago, and yet many questions remain relatively
unanswered, there is no clear standard definition for the term, factors that affect organisations’
ability to achieve alignment still not entirely clear, and finally does it really pays off in terms of real
strategic advantage to work on strategic alignment.

The motivation for this research is to study the strategic alignment concept, investigating practical
factors that really influence alignment, and use these factors to measure how strategic alignment
impact organisation’s ability to gain real competitive advantage from information systems.

The conclusion from empirically studying the impact of strategic alignment in twenty two of the
Egyptian private-sector firms proves that alignment does impact positively competitive advantage,
the relationship varied from industry group to another, showing an overall of medium correlation
between strategic alignment and competitive advantage.

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Table of Contents
Abstract ................................................................................................................................................... 1
Chapter 1 Introduction ........................................................................................................................... 4
1.1 Project report structure .......................................................................................................... 4
Chapter 2 Research Outline .................................................................................................................... 5
2.1 Research goal ................................................................................................................................ 5
2.2 Research questions ....................................................................................................................... 5
2.3 Research Approach ....................................................................................................................... 5
Chapter 3 Business – Information Systems Strategic Alignment ............................................................ 6
3.1 Introduction .................................................................................................................................. 6
3.2 Information Systems (IS) and Information Technology ................................................................ 6
3.2.1 Information Systems .............................................................................................................. 6
3.2.2 Information Technology (IT) .................................................................................................. 7
3.3 Strategy ......................................................................................................................................... 7
3.3.1 Corporate and Business Strategies ........................................................................................ 8
3.3.2 Information systems and information technology strategy .................................................. 8
3.4 IT – Business Strategic Alignment ................................................................................................. 9
3.4.1 Motivation for Alignment Research ....................................................................................... 9
3.4.2 Importance of Alignment ..................................................................................................... 10
3.4.3 Defining Alignment .............................................................................................................. 10
3.4.4 Counter Argument and Critique of Alignment Literature .................................................... 11
3.4.5 Levels and Dimensions of Alignment ................................................................................... 12
3.4.6 Challenges of Attaining Alignment....................................................................................... 13
3.4.7 Alignment Models ................................................................................................................ 13
3.4.8 Factors influencing alignment .............................................................................................. 15
Summary ........................................................................................................................................... 17
Chapter 4 – Competitive Advantage ..................................................................................................... 19
4.1 Introduction ................................................................................................................................ 19
4.2 Competitive Advantage............................................................................................................... 19
4.2.1 The five forces model, competitive strategies, and value chain ......................................... 19
4.3 Competitive advantage and information Systems...................................................................... 22
4.3.1 Competitive strategies from Information systems .............................................................. 24
Summary ........................................................................................................................................... 24
Chapter 5 Constructing the Measurement Instrument ........................................................................ 25

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 5.1 Introduction ................................................................................................................................ 25
5.2 Why to extend the Strategic Alignment Maturity Model ........................................................... 25
5.3 Alignment factors summary ........................................................................................................ 26
5.4 Strategic Alignment Maturity Model (SAMM) ............................................................................ 29
5.5 Exploring SAMM factor Groups .................................................................................................. 31
5.5.1 Communication maturity: .................................................................................................... 31
5.5.2 Competency / Value Measurements maturity: ................................................................... 31
5.5.3 Governance maturity: .......................................................................................................... 31
5.5.4 Partnership maturity: ........................................................................................................... 32
5.5.5 Scope and architecture maturity: ........................................................................................ 33
5.5.6 Skills maturity:...................................................................................................................... 33
5.6 Mapping alignment factors to SAMM factor groups (criteria) ................................................... 34
5.7 Extended alignment factors ........................................................................................................ 36
5.8 Questionnaire items for alignment measurement ......................................................................... 37
5.9 Questionnaire items for competitive advantage measurement ................................................ 39
Summary ........................................................................................................................................... 40
Chapter 6 Empirical Study..................................................................................................................... 41
6.1 Introduction ................................................................................................................................ 41
6.2 Conducting the empirical study .................................................................................................. 41
6.3 Participating organisations ............................................................................................................. 41
6.4 Analysing collected data ......................................................................................................... 42
6.4.1 Data analysis approach ........................................................................................................ 42
6.4.2 Analysis of the complete sample ......................................................................................... 43
6.4.2 Brief analysis of each industry group ................................................................................... 48
6.5 Summary ..................................................................................................................................... 51
Chapter 7 Conclusion ............................................................................................................................ 52
7.1 Research conclusion.................................................................................................................... 52
7.2 Limitations................................................................................................................................... 53
7.3 Future work ................................................................................................................................. 53
Appendix A: Questionnaire ................................................................................................................... 55
Appendix B: List of tables ...................................................................................................................... 58
Appendix C: List of figures .................................................................................................................... 59
References ............................................................................................................................................ 60

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Chapter 1 Introduction

This research project is the presented as the final step of the fulfilment of the requirements of
Master’s program “Business Information Technology” at the Middlesex University.

This introductory chapter will present the structure of the project report in terms of chapters, with
brief description of contents of each chapter.

1.1 Project report structure

This report is organised in seven chapters including this introductory chapter, following is a chapter
list:

Chapter 1: Introduction

Chapter 2: Research outline

A summary of research methodology and plan, describing how the research is to be
conducted, the goals of the project, and research questions

Chapter3: Information systems strategic alignment:

The first of two literature review chapters, presents the background for fundamental
concepts like information systems, information technology, strategy, and covers all
topics related to strategic alignment.

Chapter 4: Competitive advantage

The second of two literature review chapters, presents the concept of competitive
advantage, showing the relation to information systems and strategic alignment.

Chapter 5: Constructing the measurement instrument

This chapter makes use of the literature review presented in chapter 3 and chapter 4
to construct the strategic alignment measurement instrument that its use will be
presented in chapter 6.

Chapter 6: Empirical study

Describes how the empirical study was conducted, and provides analysis for data
collected through the study using the questionnaire instrument constructed in
chapter 5.

Chapter 7: Conclusion
The last chapter concludes the outcomes of the research, highlighting answers to
research questions, research contribution, limitations, and future work suggested.

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Chapter 2 Research Outline

This chapter defines the outline of this research in terms of goal of the research, research questions,
and research approach.

2.1 Research goal

The goal of this research is to study how strategic alignment between business and information
systems affects organisation’s ability to gain competitive advantage through information systems.

In order to achieve the research goal, a measurement instrument will be constructed by extending
one of the empirically examined measurement models, and using factors that was proved to
influence strategic alignment to enhance the model. The created measurement instrument will be
empirically tested in Egyptian private-sector market, results will be analysed and conclusions will be
demonstrated.

2.2 Research questions

The research aims to answer three major questions:

I. What is strategic alignment?

II. What factors influence strategic alignment?
III. How strategic alignment impact competitive advantage realised from information systems?

2.3 Research Approach

The research strategy will be to start by a thorough literature review in chapters 3 and 4. The
literature review should enable us to clearly describe strategic alignment, and most importantly to
define what factors have been empirically proved to have an influence to strategic alignment. The
literature review will also present the relationship between competitive advantage and information
systems and their alignment to business, discussing some of the strategies for gaining competitive
advantage through information systems.

Alignment factors (factors that influence alignment) collected through the literature review will be
used to extend attributes of the strategic alignment maturity model (SAMM) created by Luftman
(2000), creating a more comprehensive set of measurement factors to cover those which were
ignored by the original model.

The enhanced model will be used to construct a measurement instrument to measure the maturity
of strategic alignment and how it affects organisation’s ability to gain competitive advantage from
information systems.

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Chapter 3 Business – Information Systems Strategic Alignment

3.1 Introduction
This is the first of two chapters presenting the literature review part of the research, through this
chapter the concept strategic alignment will be thoroughly discussed, motivation for alignment
research will be presented with a demonstration of alignment impact to business. Major topics of
alignment are to be covered including: alignment definition, alignment challenges, alignment levels
and dimensions, alignment models, and alignment factors. The discussion of alignment factors at the
end of this chapter represents the basis for extending the alignment maturity model which is
discussed in chapter 5.

The first section of this chapter will start by defining background concepts that is needed for the
following strategic alignment discussion, the background concepts include information systems and
information technology, business strategy, and information systems strategy.

3.2 Information Systems (IS) and Information Technology

3.2.1 Information Systems
Information systems (IS) commonly defined as a set of related and connected components that
process collected inputs to produce, disseminate, analyse, distribute, and provide storage for output
information. Produced information can be used in many forms to help organizations achieving their
goals, by enhancing decision making, performance, planning, and control for example. (Bocij et al.
2006, p.46; Laudon and Laudon 2004, p.8; Stair and Reynolds 2008, p.11; Turban and Volonino 2010,
p.11).

The above definition can be used for both computer-based and manual information systems (Bocij et
al. 2006, p.47), and in this research we are focusing on the computer-based information systems
(CBIS), which can be defined as information systems that depend on computer technology
(hardware and software) in doing some or all of their tasks (Laudon and Laudon 2004, p.9; Turban
and Volonino 2010, p.12). Stair and Reynolds (2008) termed a CBIS as “a single set of hardware,
software, databases, telecommunications, people and procedures that are configured to collect,
manipulate, store and process data into information”.

In their definition Stair and Reynolds (2008) mentioned the six major components or resources of a
CBIS as shown in figure 3.1: computer hardware, computer software, computer databases,
connectivity (computer network), people and procedures. Turban and Volonino (2010) agree to the
same components, while Bocij et al. (2006) only exclude procedures.

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 Figure 3.1: Information Systems Components (Stair and Reynolds 2008)

3.2.2 Information Technology (IT)

Derived from their definition of computer-based information systems, Stair and Reynolds (2008)
states that IT is the collection of software, hardware, database, and telecommunications, Turban and
Volonino (2010) agree to such definition, stating that IT is a subset of information systems
components, however it is common to find the terms information technology and information
systems used interchangeably.

Laudon and Laudon (2004) use the term information technology infrastructure to describe the same
components affirming that they represent the foundation for building information systems on the
top of them.

From previous definitions of IS and IT we can conclude that information technology would be
generally defined as part of information systems, it also shows that we can use the term IT referring
to IS and vice versa.

3.3 Strategy
Listing many definitions for strategy, Robson (1997) states that strategy is how resources are going
to be assigned in adequate ways to realize organizational goals, claiming that there is no agreement
for a single definition of the term strategy. Bocij et al. (2006) defined strategy as the long-term goals
and direction of an organisation supported with activities and methodologies that will lead to such
direction, Turban and Volonino (2010, p.18) claim that a strategy must cover the same items.

Johnson and Scholes (1993) listed in their study (cited in Robson 1997, p.5) the main factors
organisations should consider while making strategic decisions as: activities, matching between
activities and both environment and resource capability, resource assignment, long-term direction,
goals, and implications for changes inside the organisation.

Another perspective for strategy can be found in the definition by Porter (1980) which emphasise
how organisations can form a competitive strategy by focusing on developing ways to compete. In
agreement with Porter; Turban and Volonino (2010) mention the method to realize a sustainable

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competitive advantage as one of the questions a strategy must address. The terms competitive
strategy and competitive advantage will be discussed in more details through chapter 4.

In his effort for answering “what is strategy?” Porter (1996) states that “strategy is creating fit
among a company’s activities”, claiming that strategy success and sustainability are dependent to
proper execution of well-integrated activities.

We can conclude that strategy is the direction and actions to realise long-term goals, with the help
of polices to regulate these actions and available resources towards desired direction.

3.3.1 Corporate and Business Strategies

Within the context of above definitions of strategy; many authors presented explicit definitions of
corporate and business strategies. Robson (1997, p.7) describes a corporate strategy as an overall
direction for all strategic business units (SBUs) comprising a large organisation, identifying a
framework for strategies of businesses that the company will participate in. Bocij et al. (2006) come
into agreement with Robson’s definition. De Wit and Meyer (2004) (cited in Gutierrez 2011) defines
two factors of corporate strategy process: strategy formulation by recognizing opportunities and
threats and strategy implementation which is concerned with activities like resource allocation,
control, staffing, and learning systems.

Pearlson and Saunders (2004) and Turban and Volonino (2010) presented a simple definition of
business strategy as the plan explaining business direction and how to work towards this direction.
Business strategy is also defined as the set of decisions affecting how the organisation will be
situated amongst rivals, this includes all the objectives, activities, methods, and even expectations
related to such decisions. It is about business scope and adopted methodologies for competing in
selected market within this scope, employing two major components: distinctive competences and
governance structure for obtaining competitive advantage (Henderson and Venkatraman 1989).
Macmillan and Tampoe (2000, p.170) claimed that business strategy should answer questions about
scope of the business, current and future needs of existing and potential customers, distinctive
capabilities and competences to provide competitive advantage, and what have to be done to
secure company’s future.

3.3.2 Information systems and information technology strategy

Chen et al. (2010) illustrated that information systems strategy research focused more on how to
conduct strategic planning or how to align IS strategy to an existing business strategy instead of
defining the information systems strategy, Turban and Volonino (2010) provided a definition for
information systems strategy as the information systems and information technology architecture
needed to support business priorities, such definition confirms argument by Chen et al. In a similar
stream; IT strategy designates how the infrastructure and IT services are to be offered (Turban and
Volonino, 2010)

Cited in Bocij et al. (2006); Ward and Peppard (2002) included three components of information
systems strategy: business information strategy, information systems functionality strategy, and
information technology strategy. The business information strategy as defined by Ward and Peppard
is concerned with the way information and business applications will be consumed to provide
needed support for business goals, while the information systems functionality strategy should
provide detailed and refined business requirements to achieve in business applications. The IT

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strategy is about the standards followed for using IT infrastructure and available services, it should
also guarantee that the most suitable technologies are used to provide cost effective and efficient IT
services.

Henderson and Venkatraman (1989) defined information technology strategy from another
perspective related to the positioning of the organisation in the information technology
marketplace, where the information technology strategy should reflect goals, methods, and
assumptions related to these business choices, they argued that IT strategy has three foundation
components: technology scope, distinctive competences, and (c) governance structure.

3.4 IT – Business Strategic Alignment

3.4.1 Motivation for Alignment Research
Primary motivation for studying alignment materialized from the interest in strategic business
planning and the long-term IT planning (Chan and Reich, 2007). Luftman and Kempaiah (2007) state
that IT-Business alignment has been in literature since late 1970s, joined the top-10 IT management
issues from 1980 to 1994, and became the first or second issue since then. Alignment has been a top
concern for IT executives for almost 30 years, one of the top-3 in the last 8 years (Luftman and
Kempaiah, 2007; Luftman and Ben-Zvi, 2010; Silvius et al., 2009).

Figure 3.2 presents the top IT management concerns from year 2003 and through year 2010,
showing the importance of IT and business alignment topic to IT management.

Figure 3.2 Top 10 IT Management Concerns by SIM Respondents, 2003-2010. Reprinted from Luftman and Ben-Zvi
(2010).

Chan and Reich (2007) showed that early alignment research focused on the linkage of information
technology plan to business plan, followed by two other main streams of alignment research,
examining the “congruence” of IT-Business strategies and investigative the “fit” between business
requirements and information systems objectives.

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3.4.2 Importance of Alignment
Henderson and Venkatraman (1993), Venkatraman et al. (1993), Chan (2002), and Avison et al.
(2004) argued that misalignment between business and IT strategies is one of the reasons businesses
fail to benefit from IT investments. Other than improving return on IT investment; Avison et al.
(2004) distinguished two other ways in which alignment can help businesses, as alignment can help
exploiting opportunities and can assist the firm attaining competitive advantage. Kearns and Lederer
(2000) agree with Avison, explaining that failing to align business planning and information systems
planning may prevent companies from gaining competitive advantage.
Companies’ need to connect business and technology considering the factors of rapidly changing
business strategies and incessantly improving technologies (Luftman and Brier, 1999). Newkirk and
Lederer (2006) noted that alignment assists business managers in realising the value of information
systems and improves information systems managers’ realisation of business terms.

As illustrated by Guttman (2004), well – aligned information technology and business strategies can
improve how different divisions of the enterprise work in harmony to achieve desired outcomes.
Research shows that higher level of alignment led to higher business performance and that aligned
firms outperformed unaligned ones (Luftman and Kempaiah, 2007; Chan and Reich, 2007) On the
other hand, Lack of alignment is a recognized persistent problem that needs to be resolved
(Broadbent and Weill, 1993; Reichand Benbasat, 1996; Luftman, 2003; Luftman and Kempaiah,
2007).Vaidya (2011)highlights that alignment is a “vital contributor to the overall success of IT”.

3.4.3 Defining Alignment

Andolsen (2007) provides a general definition of strategic alignment - which could be applied to
other domains – as the linkage between business’s global goals and those of every division, which is
part of attaining the global business goals. Chan (2000) gives a more specific definition of strategic
alignment as “The fit between the priorities and activities of the IS function and the business unit. The
goal in strategic alignment is for IS priorities, capabilities, decisions, and actions to support those of
the entire business”.

The idea of alignment could be described in terms of two major concepts “strategic fit and functional
integration” (Henderson and Venkatraman, 1989; Henderson and Venkatraman, 1993), in one of the
most cited article in alignment literature (cited by more than 2300 articles as per Google Scholar),
Henderson and Venkatraman (1989) described alignment as the integration of external / internal
domains and the functional integration between business and information technology.

Alignment, as Reich and Benbasat (1996) illustrate, is the extent to which IT supports and is
supported by business’s goals and plans, Silvius (2007) uses a similar approach in defining alignment.

Simonsen (1999) sees that alignment coordinates the Business – IT relationship. Turban and
Volonino (2010) comes to agreement with Simonsenby refining the relationship coordination as the
way IT department understands business priorities and directs its efforts and resources towards
serving those priorities.

Luftman (2000) defines alignment as the harmony and adoption of functions between IT and
business from one side and business and IT from the other side, using simpler terms Luftman (2003)
opined that alignment is the answer to the dilemma of “how to get technical and business folks to
see things the same way”.

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From a strategy formulation perspective Brodbeck et al. (2003) and Avison et al. (2004) concluded
that alignment refers to integrating strategies of business and IT. Gartlan and Shanks (2007) inferred
a similar definition of alignment as a parallel, interconnected, and mutual process of constructing
both business and IT strategies

In their study Maes et al. (2000) presented an explanation of alignment as a group of management
and design processes aiming for the enhancement of entity’s performance through integration of
business and IT components. Vaidya (2011) introduced a similar definition for alignment as the
coordinated work of business and IT and integration of business and IT strategies. Sauer and Yetton
(1997) as cited in Chan and Reich (2007) claims that the main concept is to reflect business
management methods to management of IT.

Duffy (2002) and Avison et al. (2004) explained that alignment involves the course of action to build
a mutual association between IT and business in order to attain competitive advantage, Henderson
and Venkatraman (1993) support such explanation, highlighting that the ability of IT capabilities to
help and even shape business strategy is important for IT to act as “a source of strategic advantage”.

3.4.4 Counter Argument and Critique of Alignment Literature

From the alignment definitions above; one can notice that scholars used many terms to describe
alignment, alignment was called fit (Henderson and Venkatraman, 1993; Chan, 2002), harmony
(Luftman et al., 1999; Luftman, 2000; Silva Molina, et al. 2005), link or linkage (Reich and Benbasat,
1996; Andolsen, 2007), integration (Henderson and Venkatraman, 1989; Weill and Broadbent, 1998;
Henderson and Venkatraman, 1993), and bridge (Ciborra, 1997).

Maes et al. (2000) consider scholars’ use of many terms to describe alignment as a sign of confusion
and misinterpretation of the alignment concept. The presence of many definitions and terms did not
overcome the problem of not having a clear strict definition of alignment (Maes et al, 2000; Avison
et al, 2004), such problem would be a reason of having contradicting interpretation of alignment
concept in literature, such contradiction comes to the very core of the debate if alignment is a state
or a process (Maes et al, 2000). One of the major concerns about alignment literature Ciborra (1997)
and Maes et al. (2000) suggested that current approaches is mostly academic and fail to offer real-
world management practices.

Concerns regarding alignment literature and even the concept of alignment itself were summarised
by Chan and Reich (2007) in the following four points:

1. Academic and systematic research.

2. The concept of alignment is not applicable in cases when business strategy is under
development or not identified.
3. Business change naturally, hence alignment should not be considered as a final state.
4. It is desirable for the IT to “challenge the business”, and alignment may limit that.

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3.4.5 Levels and Dimensions of Alignment

3.4.5.1 Alignment Levels

Alignment should be applied to all organisation levels; this includes the strategic level, tactical and
operational level, projects level, and individuals’ level (Chan and Reich, 2007).

Tarafdar and Qrunfleh (2009) opined that alignment should be applied to both strategic and tactical
levels; while alignment on the strategic level is more concerned with harmony of planning of
business and IT, alignment on the tactical level is deeply involved with the synchronisation of daily
operational and functional activities (Campbell, 2005). Floyd and Woolridge (1990)argue that
alignment should exist on both organisational and system levels, Campbell (2005) confirmed that
argument.

Project level alignment was demonstrated by Gutierrez (2011) and (Jenkin and Chan 2006: cited in
Chan and Reich, 2007), it addresses the requirement of project outcomes to match the
organisation’s strategies.

Benbya and McKelvey (2006) claim that three levels are mandatory for alignment: alignment at
individual’s level (Tan and Gallupe, 2006), business and information systems components level, and
business strategy level.

3.4.5.2 Alignment Dimensions

The strategic dimension of alignment has been the most studied, scholars considered various
dimensions of alignment through their studies. We can trace five major alignment dimensions: the
strategic and intellectual dimensions, the structural dimension, the informal structure dimension,
the social dimension, and the cultural dimension.

Strategic – Intellectual Dimension

Reich and Benbasat (2000) focused on the consistency of IT and business strategic plans, considering
the planning techniques followed to align IT planning with business planning.

Structural dimension
Structural dimension of alignment refers to the level of structural fit between IT and business, this
dimension relates to the organisational structure of IT and decision-making powers of IT (Chan,
2002). Structural dimension is also related to the reporting line of IT (Chan, 2002) which was
suggested to be shortest to senior management (Pyburn, 1983).
Informal structure dimension
Chan (2001) and Chan (2002) opine that the informal structure is as important to alignment as the
formal structure, explaining that it is the relationship-based structure that may bypass the formal
structure of the organisation (Chan, 2001; Chan, 2002; Chan et al., 2006).
Social dimension
The social dimension of alignment was defined by Reich and Benbasat (2000) by concentrating to
people involved in achieving alignment and their commitment to goals and plans, they opined that
social dimension should be studied together with the intellectual dimension.
Cultural dimension

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Having a cultural fit between IT and business was presented to be essential for successful IT planning
(Pyburn, 1983). Organisation’s cultural support is vital for the achievement of alignment, and assists
the presence of healthy informal-structure (Chan, 2002).

3.4.6 Challenges of Attaining Alignment

Attaining alignment represents by itself a challenge for business and IT executives (Broadbent and
Weill, 1993; Nickels, 2004; Bush et al., 2009)

Senior management could be the source for many alignment challenges (Gutierrez et al., 2007); by
being uncommitted to alignment or uninterested in the process, they can also make it harder when
they don’t fully support IT initiatives or understand its potential ( Gutierrez et al., 2007). On the
other side Gutierrez et al. (2007) showed that lack of skilful IT personnel, and poor IT leadership can
also represent a major challenge for alignment.

Weiss and Anderson (2004) suggests that culture of the organisation, formal hierarchy and position
of CIO/CTO, decentralisation of IT organisation can all represent challenges for attaining alignment.

Problems in corporate strategy, being unknown or ambiguous is a major challenge for alignment as
discussed by Reich and Benbasat(2000) and Campbell (2005).

Baets (1996) opined that poor industry knowledge can severely limit the chances for alignment; he
also argued that not knowing the importance of alignment by business manager also presents a
significant challenge, Silva et al. (2007) agreed to such argument.

Luftman and Kempaiah (2007) illustrated three major reasons that challenge realisation of
alignment; first is the fact that it alignment have always been interpreted as aligning IT to business,
they claimed that aligning business with IT is required too. The second issue addressed in Luftman
and Kempaiah’s study was the inadequate look for alignment as a single matter issue that can be
solved by selecting the right technology or application, instead; it is required for organisations to
consider the importance of continuous activities and processes that build and sustain alignment. The
final reason suggested in the same study was the lack of alignment maturity assessment tools.

3.4.7 Alignment Models

Scholars worked on the development of alignment models and frameworks since the late 1980s,
some of the models were inspired by the MIT90s framework and the research conducted at MIT, like
the models presented by Henderson and Venkatraman (1989), MacDonald (1991), and Baets (1992).

The Strategic Alignment Model (SAM) presented by Henderson and Venkatraman (1989) could be
considered as a milestone of the development of strategic alignment models, many of the
researchers extended Henderson and Venkatraman’s model to create other alignment models like
the generic framework by presented by Maes (1999), the Integrated Architecture Framework (IAF)
presented by Goedvolk (1999), the unified framework found in Maes et al. (2000), and the model
extension presented by Avison et al. (200).

Another significant extension of the SAM is the Strategic Alignment Maturity Model (SAMM)
presented by Luftman (2000) examining the maturity of alignment and concentrating on continuous
improvement.

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3.4.7.1 Strategic Alignment Model (SAM)
Henderson and Venkatraman (1989, 1993) proposed one of the most cited alignment model which is
the Strategic Alignment Model (SAM). The model extended the MIT90s framework’s focus to include
external aspects, and promotes the role of IT strategy to aid and even shape business (Henderson
and Venkatraman, 1989; Avison et al., 2004; Chan and Reich, 2007), it also presented that alignment
need both the strategic and functional integration (Avison et al. 2004).

Two terms: “strategic fit” and “functional integration” were used by Henderson and Venkatraman
(1993) as basis of their Strategic Alignment Model (SAM). The model considers the importance of “fit
between external positioning and internal arrangements”, leading to the four-domains model in
figure 3.3, with two domains for the business (business strategy – organisational infrastructure) and
two domains for the IT (IT strategy – IS infrastructure and processes). Four alignment perspectives
are suggested by the SAM: strategy execution, technology transformation, competitive potential,
and service level. The strategy execution and technology transformation perspectives are grouped
under business strategy as a driver, while the competitive potential and service level perspectives
are grouped under IT strategy as an enabler.

Figure 3.3: Strategic Alignment Model (Henderson and Venkatraman, 1993)

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Henderson and Venkatraman (1993) explains that the strategy execution perspective is the most
classic where the business strategy acts as a driver for both organisational and IS infrastructures, in
this perspective top manager creates the strategy and IS managers should be concerned with
strategy implementation. The second perspective (the technology transformation) as presented by
Henderson and Venkatraman (1993) have the business strategy as a driver for both IT strategy and IS
infrastructure, with a different approach of assessing the most appropriate IT strategy and IS
architecture to implement the business strategy, in this perspective executive managers are
responsible to elect technology vision that will aid selected strategy and the responsibility of IS
managers is to design and implement needed IS infrastructure that supports elected technology
vision (Henderson and Venkatraman, 1993).

Having IT strategy as an enabler; Henderson and Venkatraman (1993) shows that the competitive
potential perspective depends on taking advantage of growing technologies to maximise the
benefits through new ideas, products, and services or even business strategies, top managers are
responsible of indicating how growing IT may leverage the business and IS managers are to help top
managers recognise IT trends and opportunities. They added that the service level perspective is
seen not to be enough to get the best of IT, this perspective presents a mutual relationship between
the IT strategy as an enabler and the IS and organisational infrastructure, in order to build a “world-
class IS service organisation”, top managers’ responsibility is to ensure high priorities given to IT,
while IS managers have a more executive leadership role.

The importance of the SAM comes from the fact that it was the foundation of several alignment
research (Maes et al., 2000; Avison et al., 2004), and was supported by many empirical studies
(Avison et al., 2004; Chan and Reich, 2007). Maes et al. (2000) opined that Henderson and
Venkatrman’s model with the two explanations of Luftman (1993) and Luftman et al. (1996)
“remains unchallenged”.

3.4.8 Factors influencing alignment

Aiming to define what really contributes to the achievement of alignment; studies came out with
many factors that firms should embrace to maximise their chances of gaining and sustaining
alignment. Scholars proved empirically that those factors and antecedents drove organisations to a
better aligned IT and business. In this section we will briefly demonstrate the major factors citedin
literature.

In one of the early studies conducted by Lederer and Mendelow (1989); top management’s support
to IT executives was demonstrated to be vital to alignment, the same factor was confirmed by both
Luftman et al. (1999) as an alignment enabling factor, and Chan (2002) who indicated that business
sponsorship of IT projects is critical. Having a strategic plan in the first place was also mentioned by
Lederer and Mendelow (1989) and many other scholars as an essential antecedent for alignment, it
is much easier to have aligned plans when business vision exists and strategic plan is formalised
(Reich and Benbasat, 2000; Brown and Magill, 1994; Wang and Tai, 2003). Quality and sophistication
of the planning process was also proved by Lederer and Mendelow (1989) to affect the level of
alignment (Chan et al., 2006)

As a crucial factor, Brown and Magill (1994) suggested that IT must have a strategic role, the
suggestion was confirmed by Teo and Ang (1999). The study conducted by Brown and Magill (1994)

Page | 15
presented two other factors; having a corporate vision, and the agreement with the way technology
is managed and used (Broadbent and Kitzis, 2005).

Through their study about enablers and inhibitors of alignment; Luftman et al. (1999) listed six
factors as alignment enablers, showing that lack or existence of any of the enabling factors
represents an inhibitor to attaining alignment. The enabling factors presented in their study involved
top management’s support to IT (Lederer and Mendelow, 1989; Chan, 2002), participation of IT in
the formation of organisation strategy (Chan, 2002; Vaidya, 2011), commitment of IT people to
understand the business (Teo and Ang, 1999); Broadbent and Kitzis, 2005), execution of IT projects
according to their priorities to business, and IT management to show leadership (Baker, 2004;
Almajali and Dahalin, 2011).

Investigating the critical success factors of IS-Business plans alignment; Teo and Ang (1999) found
that obligation of senior management to use IT strategically, knowledge of information systems
management about firm’s business, and top management’s trust of information systems staff; are
the most important of factors affecting alignment. Twelve of the eighteen factors investigated by
Teo and Ang found to be more critical, these factors according to Teo and Ang (1999) are:

1. Obligation of senior management to use IT strategically.

2. Having business conversant IS management.
3. Top management’s trust of information systems staff.
4. Information systems division to offer consistently dependable and effective services to users
of other divisions.
5. Presence of consistent communication between information system staff and users of
business units.
6. IS staff are current with technology evolution.
7. Existence of collaborative work between IS and Business management to prioritise IS
projects and development.
8. IS management is well informed regarding business goals and objectives
9. Business users’ requirements are fulfilled by IS division.
10. Senior management is familiar with IT.
11. Information systems division offer innovative ideas of strategic use of IT.
12. Business plan is shared with information systems management.

In their study; Reich and Benbasat (2000) showed that factors like shared domain knowledge, how
business and IT executives communicate, the linkage between business and IT planning, previous
experience with IT implementations, and the existence of strategic business plan contribute in
attaining alignment, Campbell (2005) agreed to the significance of effective communication. Shared
domain knowledge and the previous information systems success experiences were also mentioned
by Chan et al. (2006); they included additional factors like quality of planning that was found to have
indirect affect to alignment, the size of the organisation, and the environmental uncertainty. The last
two factors in their study showed less effect to alignment than the first two.

Chan (2002) studied the effect on alignment of twenty two factors; the study showed that six of
those factors were critically important, eleven were of high importance, and the rest were of low
and moderate effect. The critical factors as suggested by Chan’s study were: tight work relationship

Page | 16
between CIO and the CEO or highest executive in the organisation (Vaidya, 2011), the strong linkage
between IS and business plans, information systems people to be part of planning for the business,
business sponsorship of IS projects, having information systems staff to co-exist with business
people, and the creation of a suitable rewards program. Factors of high importance included: longer
service of the CIO in the organisation, proper documentation of information systems stagey and
plans, having the CIO as part of the C-suite managers (Vaidya, 2011), lower turn-over of information
systems staff, suitable training and skill improvement of information systems staff, and the
formation of teams of multiple business and information systems backgrounds.

A very central idea of organisations having clear strategic goals for the IT was studied by Tallon and
Kraemer (2003) and resulted that companies knowing exactly what they strategically need from IT
achieved higher levels of alignment.

Kearns &Lederer (2003) identified the importance of information intensity of the value chain, the
mutual involvement in planning activities (i.e. CIO to contribute in business planning (Vaidya, 2011),
and CEO to contribute in IT planning)and having an IT plan that reflects the business plan.

Baker (2004) identified strong leadership (Almajali and Dahalin, 2011; Luftman et al., 1999) and
collaborative management (Teo and Ang,1999) as factors leading to better alignment.

Four factors were argued by Broadbent and Kitzis (2005) to have a strong effect on the achievement
of alignment, they discussed CIO’s commitment to understand and fulfil business needs and
information systems requirements, the top management’s commitment to build “informed
expectations” of IT, having strict IT governance, and adoption of an “IT portfolio management
approach” and manage risks against return.

Almajali and Dahalin (2011) studied the effect of the following six factors: “leadership, structure and
process, service quality, values and beliefs, IT managerial resources, and IT implementation success”.
The study proved empirically that five of the six factors have positive impact to alignment, and that
only the “structure and process” factor has not. In another recent study; Vaidya (2011) pointed at
some questions presenting factors that should reveal the extent of how IT is integrated through the
organisation: reporting line of CIO, participation of CIO in senior executive meetings, and Board of
Directors’ meetings, business’s perception of IT, is it just a service provider, a business enabler, or a
value creator?, the level of computerised services., and participation of IT in business reviews.

Summary
This chapter represented the literature review for the concept of strategic alignment. It started with
some background concepts like information systems, information technology and strategy, then
provided an exploration for the concept of strategic alignment in literature, showing what is
strategic alignment, its importance of the topic for IT management, how strategic alignment impacts
business, challenges for attaining alignment.

The strategic alignment model by Henderson and Venkatraman (1989) was briefly demonstrated as
it represents the basis for Luftman (2000) strategic alignment maturity model, which is to be
discussed through chapter 5.

A detailed literature review of factors influencing alignment (alignment factors) was presented in the
last section of the chapter, demonstrating many of factors that have been tested and empirically

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examined by researches and proved to have positive effect to alignment, this assembly and
discussion of alignment factor is to represent the foundation for extending the attributes of the
strategic alignment maturity model which is presented in chapter 5.

Chapter 4 will proceed with literature review, presenting the concept of competitive advantage.

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Chapter 4 – Competitive Advantage

4.1 Introduction
This chapter continuous to demonstrate the literature review of the research, as the main goal for
this research is to study the influence of strategic alignment on gaining competitive advantage;
hence this part of the research will provide the needed background for the concept of competitive
advantage, its relation to information systems and strategic alignment, highlighting the information
systems related competitive strategies.

4.2 Competitive Advantage

Porter (1985) states that “competitive advantage is at the heart of a firm’s performance in
competitive markets”, it is derived from organisation’s ability to provide significant value for its
buyers that surpasses the cost of activities needed for value creation (Porter, 1985; Porter and
Millar, 1985). Porter and Millar (1985) further explain that in order to achieve competitive
advantage, an organisation is to either lower the expenses attached to performing value creation
activities, or to execute those activities to build a more differentiated product /service. Morden
(2007) concluded that competitive advantage is the level of comparative market advantage an
organisation has over its direct and indirect rivals when compared to them. Turban and Volonino
(2010) added that an organisation needs to offer actual value to its clients in order to gain
competitive advantage.

Laudon and Laudon (2007) simply explains that when an organisation is “doing better” than other
organisations; it is said to have a competitive advantage over others. Stair and Reynolds (2008)
presented a definition of competitive advantage as a “significant and ideally long term benefit” that
an organization can maintain over its rivals, such benefit can lead to an enhanced customer
relationship, or lower cost. They continued to illustrate that it is vital for organisations to create and
sustain competitive advantage; however it is a complex process.

Stair and Reynolds definition mentioned the idea of a long term benefit; so it is not enough just to
build a competitive advantage, rather it is important to sustain such advantage. Porter (2001)
explains that sustainable competitive advantage is the result of efficiency of activities and processes
or a result of “strategic positioning” to offer a more unique product / service, in other words;
organisation should operate better or different than its rivals to sustain its competitive advantage.
Sustainable competitive advantage is a major profitability driver that enables an organisation to
outperform its normal rivals (Porter, 2001).

Peppard and Ward (2004) show that it is important to distinguish between competitive advantage
and sustainability, they explain that competitive advantage is a state, while sustainability is a
continuous process.

4.2.1 The five forces model, competitive strategies, and value chain
Gaining and sustaining a competitive advantage needs a deep analysis of the components of market
where an organisation competes, the factors affecting this competition, and the strategies to gain

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advantage. In this section of the research an exploration to the Porter’s five forces model and the
generic competitive strategies are introduced.

4.2.1.1 Porter’s Five Forces Model

The five forces model by Michael Porter could by one of the most used models for understanding
competitive advantage (Laudon and Laudon, 2007), the models examines the forces act upon the
organisation in its competitive market, the competitive position of the organisation is determined by
the collective power of the five forces (Robson, 1997). The formation of the five forces varies
according to organisation’s industry, as the profitability of each industry is affected by the most
powerful force or group of forces; hence it is the most critical for strategy creation (Porter, 2008).

According to Porter (2008), the five forces as shown in the following figure are: rivalry between
existing competitors, threat of new entrants, bargaining power of suppliers, bargaining power of
buyers, and the threat of substitute products or services.

Figure 4.1: Porter’s five forces model

Rivalry between existing competitors: Porter (2008) explains that competition between current rivals
may take a lot of regular methods like advertising campaigns, price discounting, or service
enhancement, he suggested that factors make this force more intense include: huge number of
competitors, slow industry growth, high exit barriers, highly similar products, low switching costs,
low managerial cost, and high fixed costs.

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Threat of new entrants: Porter (2008) illustrates that new market entrant increases the pressure on
prices, costs, and required rate of investment, it also draws a ceiling to industry’s profit expectations
(Porter, 2008). Threat of new entrants is inversely proportional to the entry barriers of the industry
(Porter, 2008).

Bargaining power of suppliers: Porter (2008) shows that strong suppliers can possess more value to
themselves by a variety of ways, like: charging higher prices, restricting quality, or transferring costs
to industry members. Supplier are considered powerful for many reasons like: low dependence for
profit on the industry they sell to, high switching costs to other suppliers, unique product / service
offered by the supplier, or the supplier can integrate forward into the industry (Porter, 2008).

Bargaining power of buyers: according to Porter (2008), a powerful buyer can get additional value by
pushing for lower prices, higher quality, or even more service. A buyer group is considered powerful
if there is small number of buyers, if the buyer purchasing volumes are relatively high, if the
products are somehow uniform, if the switching costs are low, or if buyers can integrate backward
and produce the product themselves (Porter, 2008).

Threat of substitute products or services: Porter (2008) demonstrates that a substitute offers a
similar product / service in a different way, he explains that profitability of the industry is negatively
affected by high threat of substitute. Higher threat of substitute exists if the industry offers good
price-performance trade-off to the product / service of the industry, or if the buyer’s switching cost
is low (Porter, 2008).

4.2.1.2 Generic Competitive strategies

Porter (1998) argues that an organisation can adapt one of the two essential forms of competitive
advantage: low cost or differentiation, he further explains that they are derived from organisation’s
ability to outperform its rivals in dealing with the five forces. Building on these two types, Porter
(1980, 1998) proposed three generic strategic approaches for gaining competitive advantage:

1. Overall cost leadership: the goal of having the lowest cost between rivals (Porter, 1980;
Porter, 1998).
2. Differentiation: the goal is to present a distinguished product / service (Porter, 1980; Porter,
1998).
3. Focus: the goal is to concentrate on a specific market segment using either a cost leadership
or differentiation approach (Porter, 1980; Porter, 1998).

Porter (1980) claims that it is hardly possible for an organisation to follow more than a single
strategy, he adds that overall cost leadership and differentiation are the most used strategies
(Porter, 1980; Porter, 1998), the focus strategy can take the form of cost focus or differentiation
focus, and both are not widely used (Porter, 1980; Porter, 1998).

4.2.1.3 Value Chain

Bocij et al. (2006) describes Michael Porter’s value chain as a model that reflects organization’s
fundamental activities and the value these activities provide. Porter (1985) explained that all
activities executed within the organization to design, produce, market, deliver, and support its
products and services can be represented using a value chain. Robson (1997) illustrates that the
value chain model avails basis for analysing the information intensity of organization’s activities,

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Bocij et al (2006) add that information systems can be sued to improve resource usage efficiency for
each activity in the value chain, and even used between activities to improve organizational
efficiency.

Porter (1985) divided activities into primary and support activities, the primary activities include:
inbound logistics, operations, outbound logistics, marketing and sales, and services, while the
support activities include: administration and infrastructure, human resource management,
production technology/development, and procurement. The value chain activities are shown in
figure 4.2:

Figure 4.2: Michael Porter’s value chain activities

4.3 Competitive advantage and information Systems

Porter and Millar (1985) argued that information advances influence competition in three ways: It
changes competition rules by modifying industry structure, it provides competitive advantage by
availing new means for organisations to outperform their competitors, and it even creates new
businesses out of organisation’s current operations, In terms of value chain activities Porter and
Millar (1985) added that the strategic significance of information technology comes from the fact
that it impacts the value chain by altering how value activities are performed and linked together.

Ives and Learmouth (1984) concluded that information systems give competitive advantage to
organisations (Stair and Reynolds, 2008), it help them to adapt a cost leadership, differentiation, or
focus strategy (Porter and Millar, 1985). Tang and Walters (2010) stated that companies having
better information management will have better chances to sustain competitive advantage over its
rivals.

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Luftman et al. (1993) states that IT can provide competitive advantage by proactively contribute to
mission critical systems, they claimed that new technologies will avail new opportunities for gaining
strategic competitive advantage (Luftman et al., 1993; Papp, 2001). In their study for methods of
achieving and sustaining strategic alignment; Luftman and Brier (1999) argued that IT should mainly
support business strategy by offering “distinctive competencies”, Kay (1993, pp14) describes these
distinctive competencies as capabilities coming from unique organisation’s characteristics that are
not available to others, explaining that a distinctive competency is considered a competitive
advantage when it is applied to organisation’s business.

An examination of competitive advantage conducted by Kadiyala and Kleiner (2005) showed that
strategic information systems have an impact on organization’s ability to achieve competitive
advantage especially if these information systems are in harmony with organization’s business
processes. Laurindo et al. (2009) confirms that in banks information technology is strategic and is a
source of competitive advantage.

Turban and Volonino (2010) explain that three characteristics of IT resources determine the ability of
the resource to deliver competitive advantage, these characteristics are: value, rarity, and
appropriability. They added that a resource should enable the organisation execute effective
strategies in order to be valuable (Turban and Volonino, 2010), but valuable resources are not
enough to create competitive advantage, the resource should be rare and appropriable as well
(Turban and Volonino, 2010). To help sustain achieved advantage Turban and Volonino (2010)
argued that the resource should be highly inimitable, have low mobility, and substitutable. They
explained that technology resources like software and hardware are not to give sustainable
competitive advantage, however they argued that having a capable, reliable, and flexible
information technology infrastructure can be a source of long term advantage, as it may take years
for competitors to catch up (Turban and Volonino, 2010).

Opposing to Turban and Volonino (2010), Mata et al. (1995) claim that only IT managerial skills can
be considered as a source of sustainable competitive advantage. Dehning and Stratopoulos (2003)
approve to Mata et al. (1995) and provide empirical evidence that only outstanding IT managerial
skills help sustain competitive advantage. Ong and Ismail (2008) suggest that organisations can
sustain competitive advantage from information technology by integrating information technology
with human factors, this comes to agreement to social dimension of alignment discussed in topic
3.4.5.2 of chapter 3.

Luftman, et al. (2004) suggested that organisations must effectively link IT and business domains in
order to achieve and sustain competitive advantage. Reich and Benbasat (2000) argued that IT
management would be abstracted as the issue of aligning business and IT to achieve competitive
advantage.

Goldsmith (1991) highlighted that achieving competitive advantage requires alignment in

development of information systems and business strategies, Henderson and Venkatraman (1999)
emphasized the need for strategically position IT within the organisation to enable the realisation of
competitive advantage from IT resources. Luftman et al. (1993) argued that the functional
integration part of the strategic alignment model leads to competitive advantage.

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We can find empirical evidence for the relationship between strategic alignment and competitive
advantage in Kearns and Lederer (2003) study; they proved that linking strategic business and IT
planning provided competitive advantage. Almajali and Dahalin, 2011 showed empirically that firms
achieved strategic alignment was able to realise and sustain more competitive advantage.

4.3.1 Competitive strategies from Information systems

Base on Porter’s five forces model, and generic competitive strategies; Laudon and Laudon (2007)
and Stair and Reynolds (2008) provide some strategies in which information systems can provide
competitive advantage. They argued that information systems can be used to achieve low-cost
leadership (Laudon and Laudon, 2007; Stair and Reynolds, 2008), provide product or service
differentiation (Laudon and Laudon, 2007; Stair and Reynolds, 2008), adapt a market focus or niche
strategy (Laudon and Laudon, 2007; Stair and Reynolds, 2008), enable the creation or enhancement
of new products or services (Stair and Reynolds, 2008), alter customer and supplier relationship
(Laudon and Laudon, 2007)

Drawing on Porter’s five forces model, Parsons (1983) as cited by Bakos and Treacy (1986) proposed
that information systems can provide the opportunity to gain competitive advantage through
increasing client’s switching cost, enhancing organisation’s products, decreasing organisation’s
switching cost to other supplier, replacing labour with information technology, allying with
competitors, and enhancing organisation’s relationship with its clients. Inspired by Ives and
Learmonth (1984) and Rockart and Morton(1984) Bakos and Treacy (1986) suggest some aspects of
opportunity for competitive advantage through information technology by providing operation
effectiveness, product innovation, inter-organisational synergy, and by changing power rules with
clients and suppliers.

Summary
This chapter represented the literature review for the concept of competitive advantage. It provided
an exploration for the concept in both strategy literature and information systems literature, starting
by briefly defining the concepts of competitive advantage and its sustainability, then exploring
Porter’s five forces and value chain models with a description of Porter’s perspective of the generic
competitive forces. The last section of the chapter discussed the relationship between information
systems and competitive advantage, highlighting the relationship between aligning information
systems managerial and planning aspects and sustaining competitive advantage, the chapter ends by
presenting suggested information systems related competitive strategies, which are to be used in
developing questions for the assessment instrument presented in chapter 5 to measure the gained
competitive advantage.

The next chapter will present the construction of the measurement instrument which will be used
for the empirical study.

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Chapter 5 Constructing the Measurement Instrument

5.1 Introduction
This chapter will demonstrate the development of measurement questionnaire instrument that will
be used to evaluate the maturity level of alignment and the competitive advantage realised from
information systems in an organisation.

It will draw on the literature review presented before in chapters 3, 4, utilising the alignment factors
(factors influencing alignment) discussed in section 3.4.8 of chapter 3, and making use of the
competitive strategies from information systems demonstrated in section 4.3.1 of chapter 4.

The first part of this chapter will begin by explaining the motivation for extending the strategic
alignment maturity model, and then a summary of alignment factors will be presented, followed by
a presentation of Luftman (2000) alignment maturity model and its attributes showing their relation
to alignment factors, the section after that will show the mapping of alignment factors into SAMM’s
factor groups and the differences to SAMM’s attributes, and finally questionnaire items for each
factor group including additional factors will be presented. The second part of the chapter will
demonstrate the questions derived from the information systems competitive strategies to test the
competitive advantage gained by information systems.

5.2 Why to extend the Strategic Alignment Maturity Model

The foundation of the strategic alignment measurement instrument presented in this chapter is to
use the alignment factors presented in the chapter 3 to extend Luftman’s Strategic Alignment
Maturity Model (SAMM) with additional empirically proved factors assembled from alignment-
related literature.

Being one of the most cited authors in the field of strategic alignment; Luftman (2000) provides one
of the most interesting extensions of Henderson and Venkatraman SAM model explained in chapter
3, after two major elaborations of the strategic alignment model (SAM) in Luftman (1993) and
Luftman et al. (1996), and the discussion of enablers and inhibitors of alignment in Luftman (1999);
Luftman (2000) presented a new perspective for the model aiming to test, assess, and improve the
maturity of alignment in organisations using the Strategic Alignment Maturity Model (SAMM).

SAMM was empirically tested by many authors (Ekstedt et al., 2005; Cumps et al., 2006; Luftman,
2007; De Haes and Van Grembergen, 2008), in many organisations from different countries
expanded over United States, Latin America, Europe, and India (Luftman and Kempaiah, 2007).
However studying the alignment factors in chapter 3 indicated that other important alignment
factors were not present in Luftman’s model and proved by other researchers to have considerable
influence to alignment; hence the need of extending the model by adding more practically
supported factors to the measurement attributes in order to strengthen the assessment scope while
keeping the model structure represented in the factor groups and measurement scale as presented
in section 5.4

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Some of the factors that was used to extend the model include the previous history of IT
implementation projects and whether it was successful or not, the longer service of CIO of
information systems staff as well, the role of business in IT planning, having clearly identified
strategic goals for the IT by the business, having clear linkage of the business goals and objectives in
IT planning, and having IT to show leadership.

Aiming to evaluate the level of alignment, a group of questions will be constructed to measure each
factor group covering major SAMM’s basic attributes and alignment factors.

5.3 Alignment factors summary

The following table presents a summary of alignment factors discussed in chapter 3, grouped by
author and publication and sorted by year of publication in the ascending order.

Table 5.1: Alignment factors summary

Author(s) Publication Factors

Lederer and Mendelow Coordination of information  Top management’s support to IT
(1989) systems plans with business executives.
plans.  Having a strategic plan.
 Sophisticated planning process.

Brown and Magill Alignment of the IS functions  Having a corporate vision.

(1994) with the enterprise: toward a  A strategic role for the IT.
model of antecedents.  An agreement with the way technology is
managed and used.

Luftman et al. (1999) Enablers and inhibitors of
Business-IT alignment
 Top management support to IT.
 Participation of IT in the formation of
organisation strategy.
 Commitment of IT people to understand
the business.
 Execution of IT projects according to their
priorities to business.
 IT management to show leadership.

Teo and Ang (1999) Critical success factors in the
alignment of IS plans with
business plans.
 Obligation of senior management to use IT
strategically.
 Having business conversant IS
management.
 Top management’s trust of information
systems staff.
 Information systems division to offer
consistently dependable and effective
services to users of other divisions.
 Presence of consistent communication
between information system staff and
users of business units.
 IS staff are current with technology
evolution.
 Existence of collaborative work between IS
and Business management to prioritise IS

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Reich and Benbasat Factors that influence the social
(2000) dimension of alignment
between business and
information technology
objectives
Chan (2002) Why haven't we mastered
alignment? The importance of
the informal organization
structure
Kearns andLederer A Resource‐Based View of
(2003) Strategic IT Alignment: How
Knowledge Sharing Creates
Competitive Advantage
projects and development.
 IS management is well informed regarding
business goals and objectives
 Business users’ requirements are fulfilled
by IS division.
 Senior management is familiar with IT.
 Information systems division offer
innovative ideas of strategic use of IT.
 Business plan is shared with information
systems management.
 Shared domain knowledge.
 How business and IT executives
communicate,.
 The linkage between business and IT
planning.
 Previous experience with IT
implementations.
 The existence of strategic business plan.
 Tight work relationship between CIO and
the CEO or highest executive in the C suite.
 The strong linkage between IS and
business plans.
 Information systems people to be part of
planning for the business.
 Business sponsorship of IS projects.
 Having information systems staff to co-
exist with business people.
 The creation of a suitable rewards
program.
 Longer service of the CIO in the
organisation.
 Proper documentation of information
systems stagey and plans.
 Having the CIO as part of the C-suite
managers.
 Lower turn-over of information systems
staff.
 Suitable training and skill improvement of
information systems staff.
 The formation of teams of multiple
business and information systems
backgrounds.
 The mutual involvement in planning
activities (CIO to contribute in business
planning, and CEO to contribute in IT
planning).
 Having an IT plan that reflects the business
plan.
Page | 27
Tallon and Kraemer Investigating the relationship
(2003) between strategic alignment
and IT business value: the
discovery of a paradox
Baker (2004) Leading Alignment
Ness (2005) Assessing the relationships
among IT flexibility, strategic
alignment, and IT effectiveness:
study overview and findings
Broadbent and Kitzis Interweaving business-driven IT
(2005) strategy and execution: Four
foundation factors
Campbell (2005) Alignment: Resolving ambiguity
within bounded choices.
Chan et al. (2006) Antecedents and outcomes of
strategic IS alignment: an
empirical investigation
Almajali and Factors influencing IT-Business
Dahalin(2011) Strategic Alignment and
Sustainable Competitive
Advantage: A Structural
Equation Modelling Approach
Vaidya (2011) Business-IT alignment:
Significance and the realization
Jorfi et al. (2011) The relationships between IT
flexibility, IT-business strategic
alignment, and IT capability
 Clear strategic goals for the IT
 Strong leadership.
 Collaborative management.
 IT flexibility.
 CIO’s commitment to understand and fulfil
business needs and information systems
requirements.
 The top management’s commitment to
build “informed expectations” of IT.
 Having strict IT governance.
 Adoption of an “IT portfolio management
approach” and manage risks against
return.
 Effective communication between
business and IT.
 Shared domain knowledge.
 Previous information systems success
experiences.
 Quality of planning.
 ITLeadership.
 Quality of services offered by IT.
 Values and beliefs.
 IT managerial resources.
 IT implementation success history.
 Reporting line of CIO.
 Participation of CIO in senior executive
meetings, and Board of Directors’
meetings.
 Business’s perception of IT, is it just a
service provider, a business enabler, or a
value creator?
 Level of computerised services.
 Participation of IT in business reviews.
 IT flexibility.
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5.4 Strategic Alignment Maturity Model (SAMM)
The foundation of the SAMM was to study six major factor groups (or criteria) based on the twelve
components of the strategic alignment model; the six factor groups are: communication,
competency and value, governance, partnership, scope and architecture, and skills.

Luftman (2000) suggests that the variables (attributes) of each factor group could be assessed on a
the five level alignment maturity scale shown in figure 5.1, the five maturity levels as suggested by
Luftman (2000) are:

1. Initial/Ad Hoc Process

2. Committed Process
3. Established Focused Process
4. Improved/Managed Process
5. Optimized Process

Figure 5.1: Strategic alignment maturity scale summary (Luftman and Kempaiah, 2007)

Luftman (2000, 2003) suggests a process to conduct the maturity assessment; starting by forming a
team composed from IT and business representatives, this team should assess the maturity of each
group of the six factor groups individually, coming up with a maturity level for each criterion and
then uses the outcomes to form a unified assessment for the organisation.

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For each of the six factor groups; Luftman (2000) and Luftman and Kempaiah (2007) suggested a list
of attributes to be measured, the complete list of attributes is shown the table 5.2.

Table 5.2: alignment maturity criteria attribute from Luftman (2000)

Factor Group (Criteria)
Communication
Attributes
 Understanding of business by IT.
 Understanding of IT by business.
 Inter/intra-organisational learning/education.
 Protocol rigidity.
 Knowledge sharing.
 Liaison effectiveness.

Competency/Value  IT metrics.
Measurement  Business metrics.
 Balanced metrics.
 Service level agreements.
 Benchmarking.
 Formal assessment and reviews.
 Continuous improvement.

Governance  Business strategic planning.

 IT strategic planning.
 Organisation structure.
 Budgetary control.
 IT investment management.
 Steering committees.
 Prioritisation process.

Partnership  Business perception of IT value.

 Role of IT in strategic business planning.
 Shared goals, risks, rewards, and penalties.
 IT program management.
 Relationship and trust style.
 Business sponsor – champion.

Scope and Architecture  Traditional, enabler/driver, or external.

 Standards articulation.
 Architectural integration (functional organisation,
enterprise, inter-enterprise.
 Architectural transparency, flexibility, and agility
 Manage emerging technologies.

Skills  Innovation and entrepreneurship.

 Cultural locus of power.
 Management style.
 Change readiness.
 Career crossover, training / education.
 Social, political, trusting, interpersonal environment.

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5.5 Exploring SAMM factor Groups
In this section of the research; the SAMM six factor groups (criteria) for measuring alignment
maturity will be demonstrated, showing the relationship and commonality between attributes of
each group and alignment factors summarised in table 5.1.

5.5.1 Communication maturity:

Luftman (2000) stresses on the value of communication as a key factor for effective alignment
(Campbell, 2005), Reich and benbasat (2000) confirmed, highlighting that presence of high-level of
communication between IT and business executives is indispensable, Teo and Ang (1999) reported
communication as one of the critical success factors for alignment.

The significance of communication factors to alignment was discussed by many researchers; one of
the most emphasized communication-related factors was the commitment of IT to understand the
business (Luftman et al., 1999; Teo and Ang, 1999; Luftman, 2000; Broadbent and Kitzis, 2005), in
the same stream; it is imperative to have a degree of IT familiarity from senior management side
(Teo and Ang, 1999; Luftman, 2000), such familiarity should lead to the ability to develop informed
expectations from IT (Broadbent and Kitzis, 2005).

Shared domain knowledge proved to be a direct contributor to a better efficient communication

between business and IT, it facilitates mutual understanding of business and IT processes (Reich and
benbasat, 2000; Luftman, 2000; Chan et al., 2006; Almajali and Dahalin, 2011).

Luftman (2000) included the existence of a liaison between business and IT to facilitate the
communication as one of the communication factors; he explained that effectiveness of such liaison
can lead to a higher level of communication alignment maturity.

5.5.2 Competency / Value Measurements maturity:

Value measurement is concerned with the quality of measures the organisation uses to evaluate
performance and value of operations, processes, and projects (Luftman, 2003), competency and
value measurement maturity is also concerned with the presence of well-adjusted metrics to
evaluate the value added by information technology to the business (Luftman and Kempaiah, 2007),
these measurements must be shared in an understandable format for business and IT (Luftman,
2003; Luftman and Kempaiah, 2007). Silviuset. al (2009) illustrated that being able to determine the
value realised from alignment must be a building block from alignment maturity evaluation.

Having properly defined IT and business measurement procedures, the integration of these
measurements, the presence of formal periodical assessments and reviews are all parts of
competency and value factors that affect the alignment maturity (Luftman, 2000). Guaranteeing
quality, consistency, and dependability of services delivered by the IT is one of critical factors for
alignment (Teo and Ang, 1999; Almajali and Dahalin, 2011), such factor could be monitored and
regulated by the existence of a service level agreement or a similar arrangement between business
and IT (Luftman, 2000).

5.5.3 Governance maturity:

Attaining a higher level of alignment between IT and business is the major objective for IT
governance (Haes and Grembergen, 2008; Silvius et al., 2009) Broadbent and Kitzis (2005) evidenced
that having a strict IT governance was a major contributor in achieving alignment, by ensuring that

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selection and prioritisation of IT projects and IT resource assignment are in the right direction for
realisation of business goals and objectives (Luftman and Brier, 1999; Luftman et al., 1999; Luftman,
2000; Luftman, 2003).

In their work for defining how to achieve and sustain business-IT alignment; Luftman and Brier
(1999) suggested that no single governance factor will lead to alignment, and it is needed to use the
most of them in conjunction.

Measuring the maturity level of IT governance involves the examination of IT budget control and IT
investment decisions (Luftman and Brier, 1999; Luftman, 2000), CIO reporting line: it was proved
that CIO reporting directly to CEO helped to achieve higher level of alignment (Luftman and Brier,
1999; Chan, 2002), prioritization process of the IT projects and execution of projects according to
predefined priorities (Luftman and Brier, 1999; Luftman et al., 1999; Teo and Ang, 1999; Luftman,
2000; Luftman, 2003), IT management processes and activities control (Brown and Magill, 1994;
Luftman, 2000; Broadbent and Kitzis, 2005), the presence of steering committees on strategic,
tactical, and operational levels (Luftman and Brier, 1999; Luftman, 2000). Sophistication of the
business and IT planning processes was also verified to have a direct impact to alignment (Lederer
and Mendelow, 1989; Luftman, 2000; Chan et al., 2006).

Another factor that was suggested by Luftman and Brier (1999) is to physically locate IT staff with
business staff, Chan (2002) proved validity of this factor to facilitate alignment.

5.5.4 Partnership maturity:

Luftman et al., (1999) illustrated that business-IT partnership is one of the most important enablers
of alignment. Partnership maturity examines the factors related to the relationship between
business and IT, addressing the role of IT in business strategies development, and the presence of
mutual trust between business and IT (Luftman, 2003; Luftman and Kempaiah, 2007). Partnership
also addresses shared goals and objectives (Silvius et al., 2009) and perceptions of contributions by
both sides (Luftman, 2000; Silvius et al., 2009).

A key factor when assessing partnership maturity is to investigate the business perception of IT value
(Luftman, 2000; Vaidya, 2011), the obligation of business executives to make a real strategic use of
IT could be one of the most effective factors in attaining alignment (Brown and Magill, 1994; Teo and
Ang, 1999), one of the aspects that affects the strategic use of IT was discussed by Almajali and
Dahalin (2011) who opined that previous values and beliefs of business and IT executives as well
have a real effect on how IT is perceived and used, Leonard (2008) showed that in some cases the IT
executives can’t foresee the competitive potential of information systems.

The degree of IT executives’ participation in strategic business planning is another indicator for the
partnership maturity (Luftman et al., 1999; Luftman, 2000; Chan, 2002; Kearns and Lederer, 2003),
contribution of business in IT planning is need too (Kearns and Lederer, 2003). Sharing planning
activities requires a certain level of trust from both sides, hence the trust style is one of the issues
that directly impacts alignment (Teo and Ang, 1999; Luftman, 2000). Trust in turn is highly affected
by the previous history of IT implementations and information systems success in the organisation
(Reich and Benbasat, 2000; Chan et al., 2006; Almajali and Dahalin, 2011).

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Business support for IT and sponsorship of projects was evidenced as a crucial issue for successful
alignment (Lederer and Mendelow, 1989; Luftman et al., 1999; Luftman, 2000; Chan, 2002),
organisations should consider the adoption of a program and portfolio management approach for IT
projects (Luftman, 2000; Broadben and Kitzis, 2005). Teo and Ang (1999) concluded sharing of
business goals and plans is another significant alignment factor, IT executives must be well-informed
regarding business objectives, Luftman (2000) confirmed the significance of goals and objectives
sharing as a partnership maturity factor, Tallon and Kraemer (2003) proved that having clearly
defined and properly shared strategic goals for the IT helped firms to attain better levels of
alignment. Sharing between business and IT must extend to other aspects like risks, rewards, and
even penalties (Luftman, 2000), Chan (2002) opined that having a suitable rewards program had a
desirable effect to alignment.

5.5.5 Scope and architecture maturity:

Luftman (2000) defines the scope and architecture maturity measure as the measure of maturity of
information technology from the technical side, examining the extent to which technology has
developed to acquire a role that is higher than the traditional business support (Luftman, 2003).

Teo and Ang (1999) explained that when information systems staff was current with emerging
technologies it helped the business to realise higher value from information systems, Luftman (2000)
confirmed.

Ness (2005) proved that IT flexibility is in direct correlation with alignment (Luftman, 2000; Luftman
and Kempaiah, 2007), an approval by Jorfi et al. (2011) in their study that discussed the relationship
between IT flexibility and alignment, showing that aspects of flexibility like modularity, compatibility,
and connectivity have positive influence to alignment.

The importance of an information technology to be integrated to all levels of the organisation was is
another aspect of scope and architecture maturity (Luftman, 2000; Luftman and Kempaiah, 2007),
capability of IT to support business process is also critical (Luftman and Kempaiah, 2007).

5.5.6 Skills maturity:

Silvius et al. (2009) explains skills maturity measure as the measure of “ability to execute”, showing
that other factors will not lead to alignment alone without the capability to put them in action.
Luftman (2000) states that skill maturity should cover all human resource aspects of the organisation
like recruitment, training, performance evaluation (Luftman and Kempaiah, 2007) it should even go
past traditional aspects to address organisation’s cultural and social aspects (Luftman, 2000).

A major skill that was discussed by many scholars to be of great importance is the IT leadership
(Baker, 2004; Almajali and Dahalin, 2011), Luftman et al. (1999) considered IT leadership as one of
the major enablers for alignment.

Suitable training and skill improvement of information systems staff is indispensable for gaining
needs skills to support business and IT strategies (Teo and Ang, 1999; Luftman, 2000; Chan, 2002),
having information systems staff who is capable to fulfil business users’ requirements demonstrated
to positively affect alignment (Teo and Ang, 1999; Broadbent and Kitzis, 2005)

Management skills affects the management style of the organisation, and it was proved that a
collaborative management style facilitated alignment (Baker, 2004), this actually comes to

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agreement with the sharing of business planning activities, business goals and objectives discussed
through the partnership maturity section.

Teo and Ang (1999) proved that having an organisational environment that encourages innovation
and information systems division that is able to offer innovative strategic ideas helped to achieve
better levels of alignment, Luftman (2000) agreed by adding innovation and entrepreneurship to the
skills maturity assessment.

5.6 Mapping alignment factors to SAMM factor groups (criteria)

This section establishes the mapping between alignment factors and SAMM factor groups; table 5.3
shows common factors grouped together under each factor group.

Table 5.3: mapping of alignment factors to SAMM factor groups.

Factor Group Factors Authors
(Criteria)
Communication  Shared domain knowledge.  Reich and Benbasat
(2000)
 Chan et al. (2006)
 Commitment of IT people to understand  Luftman et al. (1999)
the business.  Teo and Ang (1999)
 Having business conversant IS
management.
 Presence of consistent communication  Teo and Ang (1999)
between information system staff and  Reich and Benbasat
users of business units. (2000)
 How business and IT executives  Campbell (2005)
communicate.
 Effective communication between
business and IT
 Senior management is familiar with IT.  Teo and Ang (1999)
 The top management’s commitment to  Broadbent and Kitzis
build “informed expectations” of IT. (2005)
Competency -  Information systems division to offer  Teo and Ang (1999)
Value consistently dependable and effective  Almajali and Dahalin
Measurement services to users of other divisions. (2011)
 Quality of services offered by IT.
 Participation of IT in business reviews.  Vaidya (2011)
Governance  Sophisticated planning process.  Lederer and Mendelow
 Quality of planning. (1989)
 Chan et al. (2006)
 Having a written business strategic plan.  Lederer and Mendelow
 Having a corporate vision. (1989)
 Reich and Benbasat
(2000)
 Brown and Magill (1994)
 An agreement with the way technology is  Brown and Magill (1994)
managed and used.
 Existence of collaborative work between IS  Teo and Ang (1999)
and Business management to prioritise IS  Luftman et al. (1999)

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 projects and development.
 Execution of IT projects according to their
priorities to business.
 Having information systems staff to co-  Chan (2002)
exist with business people.
 Proper documentation of information  Chan (2002)
systems stagey and plans.
 Having the CIO as part of the C-suite  Chan (2002)
managers.  Vaidya (2011)
 Tight work relationship between CIO and
the CEO or highest executive in the C
suite002E
 Participation of CIO in senior executive
meetings, and Board of Directors’
meetings.
 Reporting line of CIO.
 Having strict IT governance.  Broadbent and Kitzis
(2005)
 Values and beliefs  Almajali and Dahalin
(2011)
Partnership  Top management’s support to IT  Lederer and Mendelow
executives. (1989)
 Luftman et al. (1999)
 A strategic role for the IT.  Brown and Magill (1994)
 Obligation of senior management to use IT  Teo and Ang (1999)
strategically.  Vaidya (2011)
 Business’s perception of IT, is it just a
service provider, a business enabler, or a
value creator?
 Participation of IT in the formation of  Luftman et al. (1999)
organisation strategy.  Chan (2002)
 Information systems people to be part of  Kearns andLederer
planning for the business. (2003)
 The mutual involvement in planning
activities (CIO to contribute in business
planning, and CEO to contribute in IT
planning)
 Top management’s trust of information  Teo and Ang (1999)
systems staff.
 IS management is well informed regarding  Teo and Ang (1999)
business goals and objectives.
 Business plan is shared with information
systems management.
 Previous success experience with IT  Reich and
implementations. Benbasat(2000)
 Chan et al. (2006)
 Almajali and Dahalin
(2011)
 Business sponsorship of IS projects.  Chan (2002)

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  The creation of a suitable rewards  Chan (2002)
program.
 The formation of teams of multiple  Chan (2002)
business and information systems
backgrounds.
 Adoption of an “IT portfolio management  Broadbent and Kitzis
approach” and manage risks against (2005)
return.
 Clear strategic goals for the IT.  Tallon and Kraemer
(2003)
 The linkage between business and IT  Reich and Benbasat
planning. (2000)
 The strong linkage between IS and  Chan (2002)
business plans.  Kearns andLederer
 Having an IT plan that reflects the business (2003)
plan.
Scope and  IS staff are current with technology  Teo and Ang (1999)
Architecture evolution.
 Business users’ requirements are fulfilled  Teo and Ang (1999)
by IS division.
 IT flexibility.  Ness (2005)
 Jorfi et al. (2011)
 Level of computerised services.  Vaidya (2011)
Skills  IT management to show leadership.  Luftman et al. (1999)
 Baker (2004)
 Almajali and Dahalin
(2011)
 Information systems division offer  Teo and Ang (1999)
innovative ideas of strategic use of IT.
 Suitable training and skill improvement of  Chan (2002)
information systems staff.
 Collaborative management.  Baker (2004)
 Lower turn-over of information systems  Chan (2002)
staff.
 Longer service of the CIO in the
organisation.

5.7 Extended alignment factors

Table 5.4 shows alignment factors that are to be used to extend the SAMM factors after removing
factors common with SAMM ones.

Table 5.4: Extended alignment factors

Factor Group (Criteria) Attributes
Communication  The top management’s commitment to build “informed
expectations” of IT.

Governance  Having a written business strategic plan

 Having information systems staff to co-exist with business people.

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  Formation of cross functional teams.
Partnership  CEO to contribute in IT planning.
 Previous success experience with IT implementations.
 Business to define clear strategic goals from IT.
 Mapping of business goals and objectives to IT plan.

Scope and Architecture  Business users’ requirements are fulfilled by IS division.

Skills  Long service of CIO

 Skill retention of information systems staff

5.8 Questionnaire items for alignment measurement

This section illustrates the questions used to evaluate the each factor group of the six groups; the
questions were designed based on the two groups of factors in table 5.2 (SAMM alignment
attributes) and table 5.4 (extended alignment factors).

Note: the term information technology and its abbreviation (IT) were used for most of the
questionnaire items as users of the Egyptian market are more familiar with it than the term
information systems and its abbreviation IS.

Table 5.5: Questions used to evaluate alignment level of each factor group
Factor Groups Questions
Communication  Information technology executives and employees understand
organisation's business.
 Business managers and non-information technology employees
understand information technology.
 Organisation’s business domain knowledge is well-shared to
different business divisions including information technology
division.
 Consistent bidirectional (two-ways) communication between
business and IT executives exist
 Senior management is familiar with IT and committed to
formulate informed expectations regarding information
technology
 Organisation’s culture encourages learning from former
experiences, problems, and challenges of previously conducted
IT-related decisions and projects.
 An effective liaison person between business and IT exists to
facilitate communication.
 Previously conducted IT projects and implementations in your
organisation were concluded with success and achieved
expected goals.
Competency - Value  A formal business and IT assessment, reviews, and measurement
Measurement standards are employed and used on regular basis for continuous
improvement.
 Business and IT metrics (assessment and measurement) are
integrated.

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  A service level agreement or a similar arrangement exists
between IT and business units to assure quality of delivered IT
services.
 Business users are generally satisfied regarding available IT
services.
Governance  CIO / CTO / Head of IT division reports directly to CEO / MD or
highest ranked senior manager.
 IT investment decisions follow a structured and governed
process.
 Accepted IT governance standards are implemented and
followed throughout all levels of the organisation.
 Planning activities is highly sophisticated, strategic plans are
properly documented.
 Business can clearly define strategic goals that are related to
information technology.
 Prioritization and selection of IT projects is done collaboratively
by senior management and IT executives.
 IT projects are executed according to previously defined business
priorities.
Partnership  Information technology is considered as an enabler and strategic
partner to business.
 IT executives formally participate in strategic business planning
(being part of planning activities as a committee member for
example).
 Business executives participates actively in IT strategic planning.
 IT expenditure is considered as an investment not just as a cost
centre.
 A portfolio and program management approach is used to
manage IT projects.
 Mutual trust exists between IT division and other business
divisions.
 Business sponsors IT projects and provides support when
needed.
 IT staff is part of incentives and rewards program of your
organisation.
 Information systems staff co-exists with business employees,
cross-functional work teams exist.
 Information technology goals and objectives are linked to
business strategic plan.
Scope and Architecture  Information technology is integrated to all business level
(example: business applications are available on functional,
organisation, and inter-organisational levels)
 Information systems architecture is flexible and can respond well
to changes in business (example: existing business applications
supports the creation of new business product, change in work
rules, or regulations).
 Integration between different information systems and business
applications exists, need of manual data manipulation is limited
(information exchange between different applications is
automated).

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  Information systems staff offers solutions to business users’
requirements and needs.

Skills  Organisation’s environment encourages innovation and

entrepreneurship.
 Information systems staff offers innovative ideas regarding
strategic use of IT.
 Management style is collaborative and considers goals, outcomes
and profits.
 Organisation is ready to change (low resistance to change), and
proactive to dynamic market conditions.
 Education and cross training is available through the whole
organisation.
 Suitable training and skill improvement for IT staff is available.
 Information technology employees are current with technology
evolution.
 CIO and IT staff long-serviced the organisation, generally they
have low turn-over.
 IT shows strong leadership.

5.9 Questionnaire items for competitive advantage measurement

Seven questions were constructed to measure the competitive advantage gained from information
systems based on the competitive strategies from information systems demonstrated in section
4.3.1 of chapter 4.

Table 5.6: Questionnaire items to evaluate competitive advantage from information systems
Question Literature reference
Information technology - related projects, implementation of computer-based information
systems, and business applications helped to:

Lower the cost of firm’s product / service. Laudon and Laudon (2007)
Stair and Reynolds (2008)
Provide the option to create a new product / service. Stair and Reynolds (2008)
Present a product / service differentiation with respect to Laudon and Laudon (2007)
competitors. Stair and Reynolds (2008)
Build barriers to keep potential competitors from joining the Porter (2008)
market.
Change the balance of power with organisation's suppliers. Laudon and Laudon (2007)
Parsons (1983)
Bakos and Treacy (1986)
Impact customer’s decision to switch to your firm’s products / Parsons (1983)
services. Bakos and Treacy (1986)
Increase the cost of switching to other competitors. Parsons (1983)
Porter (2008)

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Summary
This chapter presented the steps taken to build the questionnaire instrument which will be used to
evaluate the influence of alignment maturity level to organisation’s ability of realising competitive
advantage from information systems.

At the beginning of the chapter the rationale behind extending the strategic alignment maturity
model was explained, then a summary of factors discussed in chapter 4 was presented in table 5.1,
this was followed by the an explanation of the original model of SAMM, and then the six factor
groups of SAMM were discussed highlighting the relationship with common factors and additional
factors. In table 5.3 mapping and grouping of alignment factors to SAMM factors groups was shown,
then table 5.4 offered the extended factors, representing the factors to be used for extending
SAMM, the last two sections presented questionnaire items for the two parts of the questionnaire:
the alignment maturity measure, and the competitive advantage measure respectively. The full
questionnaire is demonstrated in Appendix A.

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Chapter 6 Empirical Study

6.1 Introduction
This chapter demonstrated the empirical study part of this research, it uses the measurement
instrument (questionnaire tool) developed through chapter 5, to assess the relationship between
the level strategic alignment maturity and the level competitive advantage realised from information
systems.

6.2 Conducting the empirical study

Data for the empirical study were collected using the measurement instrument tool designed
through chapter 5. The questionnaire is composed of 49 questions, using a Likert five-level scale, and
participants were asked for every question to select their level of agreement / disagreement to give
question where:

 The choice (1) denotes: Strongly disagree

 The choice (2) denotes: Disagree
 The choice (3) denotes: Neither agree nor disagree
 The choice (4) denotes: Agree
 The choice (5) denotes: Strongly agree

Targeted audience of the survey were private-sector banks and companies working in Egypt, from
which the researcher was able to collect twenty two valid responses from multiple industries.

Data were gathered using direct person to person interviews, paper-based survey, electronic mail,
and direct filling of survey form using “Google Docs” survey form tool.

All participants required keeping their information and their organisation’s undisclosed; hence they
will be referred as company 1 through 22.

6.3 Participating organisations

The questionnaire was answered by 22 banks and companies; the distribution of participants by
industry is listed in table 6.1 and shown in the pie-chart format in figure 6.1.

Table 6.1: Survey participants by industry

Industry Number of %
Participants
Banking and Finance 9 41%
Advertising / Media 3 14%
IT and 5 23%
Telecommunication
Consulting and 4 18%
engineering services
Cement / steel 1 5%
Total participants 22
Figure 6.1: Survey participants by industry

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6.4 Analysing collected data
The questionnaire included 49 questions, where 42 questions dedicated to measure the level of
alignment maturity in the six alignment factor groups: communication, competency-value
measurement, governance, partnership, scope and architecture, and skills. The last 7 questions were
to measure the degree of competitive advantage realised from information systems.

The following sections will present the data analysis approach, the analysis of the complete sample,
and analysis of each industry group.

6.4.1 Data analysis approach

For every instance, an average of the responses for each alignment factor group of the six factor
groups was calculated, an average for the complete 42 responses for alignment level measurement,
and an average for the 7 competitive advantage questions. The relationship between strategic
alignment of the firm and competitive advantage will be examined using correlation coefficient,
coefficient of determination calculations. The correlation and determination coefficients calculation
will take place for the average alignment maturity score against the average competitive advantage
score, and for the average score of each alignment factors group against the average score of
competitive advantage as well. The same steps will be executed over the whole sample and over
each industry group except for the cement / steel industry group as only a single response is
available.

Bluman (1998) states that the correlation coefficient is calculated “to measure the strength and
direction” of the relationship between two variables”, the use coefficient of determination gives
better indication for the dependency between the variables testes, as it indicates the percentage of
variation in the dependent variable that can referenced to the change in the independent variable
(Bluman, 1998). Correlation coefficient ranges from -1 to 1, where values closer to 1 indicate strong
positive relationship between variables being examined, values closer to -1 indicate strong negative
relationship between variables being examined, and values closer to 0 (zero) indicate weak
relationship (Bluman, 1998)

In our investigation, the dependent variable is the average competitive advantage score, and its
variation will be examined against the variation of the following independent variables:
 Average strategic alignment maturity score
 Average communication maturity score
 Average competency-value measurement maturity score
 Average governance maturity score
 Average partnership maturity score
 Average scope and architecture maturity score
 Average skills score

The following abbreviations are used for data presentation in tables of this chapter:
 Company code: COMP#
 Communication maturity: COM.
 Competency – Value measurement maturity: VAL.
 Governance maturity: GOV
 Partnership maturity: PAR

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  Scope and architecture maturity: SCP
 Skills maturity: SKL
 Strategic alignment maturity: SA
 Competitive advantage: CA

6.4.2 Analysis of the complete sample

This section presents the data analysis of complete survey data; table 6.2 demonstrates a summary
of all average calculations for all participants.

Table 6.2: Summary of average calculations

COMP# Industry COM VAL GOV PAR SCP SKL SA CA
1 Banking - Finance 3.75 2.75 4.29 4.20 3.00 3.78 3.79 3.00
2 Banking - Finance 3.50 2.50 1.86 2.90 4.00 2.78 2.88 2.71
3 Advertising / Media 4.38 4.50 4.43 4.30 4.75 4.44 4.43 3.29
4 IT and 3.75 4.00 4.43 4.30 5.00 4.56 4.31 4.00
telecommunication.
5 Banking - Finance 3.50 3.00 3.29 3.60 3.50 3.22 3.38 3.57
6 Banking - Finance 3.38 4.00 3.86 3.90 5.00 2.78 3.67 2.57
7 Advertising / Media 4.38 3.75 4.00 4.00 3.50 4.00 4.00 4.14
8 Consulting and 3.13 4.00 4.71 4.80 4.75 4.67 4.36 4.29
engineering
services
9 Banking - Finance 3.88 3.25 3.71 4.10 4.00 3.67 3.81 3.71
10 IT and 4.38 3.75 4.00 3.50 3.75 3.56 3.81 3.29
telecommunication.
11 IT and 2.63 1.75 2.57 2.40 2.75 2.33 2.43 4.29
telecommunication.
12 IT and 4.13 2.50 3.71 3.20 3.75 2.56 3.31 1.29
telecommunication.
13 Consulting and 3.88 3.25 2.86 2.80 2.75 3.56 3.21 2.14
engineering
services
14 Banking - Finance 3.88 3.75 3.00 3.10 2.50 3.67 3.36 3.43
15 Banking - Finance 4.25 4.75 4.00 4.40 4.00 3.78 4.17 4.14
16 Banking - Finance 3.75 2.25 3.57 3.90 3.75 3.78 3.62 3.71
17 Banking - Finance 4.13 4.00 3.71 4.10 4.75 4.00 4.07 3.86
18 Advertising / Media 2.63 3.00 2.86 2.20 1.75 2.22 2.43 1.71
19 Cement / steel 3.25 2.00 4.43 2.00 2.50 1.67 2.62 1.43
20 IT and 3.13 3.25 2.86 3.00 3.00 3.11 3.05 3.57
telecommunication.
21 Consulting and 3.00 3.00 3.29 3.60 3.00 2.78 3.14 2.86
engineering
services
22 Consulting and 4.00 4.00 3.86 4.40 4.00 3.78 4.02 3.43
engineering
services

Complete data sample: average competitive advantage score against average strategic alignment
maturity score
The calculation of correlation coefficient between the average strategic alignment maturity and
average competitive advantage gave the value of (0.54), which indicates medium positive
correlation between the two variables, while the coefficient of determination value was (0.29)
indicating that less than 30% or the variation in average competitive advantage can be a result of the

Page | 43
average strategic alignment. From the scatter plotting of the relationship between the two variables
in figure 6.2, the regression line equation can be built, which indicates as per Bluman (1998) “data’s
line best fit”.
The regression line equation is (y = 0.7943 x + 0.3904) where y: is the average competitive
advantage gained and x: is the average strategic alignment maturity

Figure 6.2: scatter diagram showing relationship between average strategic alignment maturity and average
competitive advantage

Complete data sample: average competitive advantage score against average communication
maturity score
 Correlation coefficient value: 0.16 indicating very low positive relationship.
 Coefficient of determination value: 0.03 indicating that a very low percentage of variation in
average competitive advantage score is due to the variation of the average communication
maturity score.
 Relationship between the two variables is weak.
 The relationship is shown in the scatter diagram in figure 6.3.

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Figure 6.3: scatter diagram showing the relationship between average communication maturity and average
competitive advantage

Complete data sample: average competitive advantage score against average competency/value
measurement maturity score
 Correlation coefficient value: 0.40 indicating medium positive correlation.
 Coefficient of determination value: 0.16 indicating that a low percentage of variation in
average competitive advantage score is due to the variation of the average
competency/value measurement maturity score.
 Relationship between the two variables is weak.
 The relationship is shown in the scatter diagram in figure 6.4.

Figure 6.4: scatter diagram showing the relationship between average competency-value maturity and
average competitive advantage

Complete data sample: average competitive advantage score against average governance
maturity score
 Correlation coefficient value: 0.16 indicating very low positive correlation.

Page | 45
  Coefficient of determination value: 0.02 indicating that a tiny percentage of variation in
average competitive advantage score is due to the variation of the average governance
maturity score.
 Medium positive correlation exists, but the coefficient of determination shows low
relationship between the variations of the tow variables.
 The relationship is shown in the scatter diagram in figure 6.5.

Figure 6.5: scatter diagram showing the relationship between average governance maturity and average
competitive advantage

Complete data sample: average competitive advantage score against average partnership
maturity score
 Correlation coefficient value: 0.60 indicating a medium positive correlation.
 Coefficient of determination value: 0.36 indicating that 36% of variation in average
competitive advantage score is due to the variation of the average partnership maturity
score.
 Medium positive correlation exists.
 The relationship is shown in the scatter diagram in figure 6.6.

Page | 46
 Figure 6.6: scatter diagram showing the relationship between average partnership maturity and average
competitive advantage

Complete data sample: average competitive advantage score against average scope and
architecture maturity score
 Correlation coefficient value: 0.41 indicating a medium positive correlation.
 Coefficient of determination value: 0.17 indicating that a low percentage of variation in
average competitive advantage score is due to the variation of the average scope -
architecture maturity.
 Medium positive correlation exists, but the value of determination coefficient is still very
low.
 The relationship is shown in the scatter diagram in figure 6.7.

Figure 6.7: scatter diagram showing the relationship between average scope and architecture maturity and
average competitive advantage

Page | 47
Complete data sample: average competitive advantage score against average skills maturity score

 Correlation coefficient value: 0.67 indicating a nearly high positive correlation.

 Coefficient of determination value: 0.45 indicating that almost half of variation in average
competitive advantage score is due to the variation of the average skills maturity score.
 Nearly high positive correlation exists, and coefficient of determination shows medium
relationship between the variations of the tow variables.
 The relationship is shown in the scatter diagram in figure 6.8.

Figure 6.8: scatter diagram showing the relationship between average skills maturity and average
competitive advantage

Complete data sample: analysis summary

A clear medium positive correlation was present between the average of strategic alignment
maturity measure and average competitive advantage measure, the breakdown of the relationship
analysis between each alignment factor group and average competitive advantage measure shows
the following:

 Very low relationship with communication and governance maturity.

 Medium relationship with competency/value, partnership, scope and architecture maturity.
 Nearly high relationship with skills maturity.

6.4.2 Brief analysis of each industry group

This section demonstrates a brief analysis of each industry group individually.

Analysis of banking and finance industry group

The correlation and determination coefficients presented in table 6.3 indicate the following:
 Above medium correlation between the overall average of strategic alignment maturity and
average competitive advantage measure.
 Communication maturity followed by skills maturity scored highest correlation with high
determination factors as well.

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  Medium correlation with partnership maturity.
 Almost no correlation at all with scope and architecture maturity.
 Low correlation and very low determination coefficient for competency/value measurement
and governance maturity.

Table 6.3: analysis of banking and finance industry group

COMP# COM VAL GOV PAR SCP SKL SA CA
1 3.75 2.75 4.29 4.20 3.00 3.78 3.79 3.00
2 3.50 2.50 1.86 2.90 4.00 2.78 2.88 2.71
5 3.50 3.00 3.29 3.60 3.50 3.22 3.38 3.57
6 3.38 4.00 3.86 3.90 5.00 2.78 3.67 2.57
9 3.88 3.25 3.71 4.10 4.00 3.67 3.81 3.71
14 3.88 3.75 3.00 3.10 2.50 3.67 3.36 3.43
15 4.25 4.75 4.00 4.40 4.00 3.78 4.17 4.14
16 3.75 2.25 3.57 3.90 3.75 3.78 3.62 3.71
17 4.13 4.00 3.71 4.10 4.75 4.00 4.07 3.86
Correlation
0.82 0.34 0.33 0.47 -0.08 0.78 0.60
coefficient
Determination
0.67 0.12 0.11 0.22 0.01 0.60 0.37
coefficient

Analysis of advertising and media industry group

The correlation and determination coefficients presented in table 6.4 indicate the following:
 Very high correlation between the overall average of strategic alignment maturity and
average competitive advantage measure supported by a high value of determination
coefficient.
 Almost all alignment factor groups show high positive correlation with medium to high
values of determination coefficient.
 Communication maturity demonstrates almost perfect correlation (0.94) with very high
determination as well.

Table 6.4: analysis of advertising and media industry group

COMP# COM VAL GOV PAR SCP SKL SA CA
3 4.38 4.50 4.43 4.30 4.75 4.44 4.43 3.29
7 4.38 3.75 4.00 4.00 3.50 4.00 4.00 4.14
18 2.63 3.00 2.86 2.20 1.75 2.22 2.43 1.71
Correlation
0.94 0.64 0.81 0.88 0.71 0.86 0.85
coefficient
Determination
0.88 0.41 0.66 0.78 0.51 0.74 0.72
coefficient

Analysis of IT and telecommunication services industry group

The correlation and determination coefficients presented in table 6.5 indicate the following:

Page | 49
  A very small negative value of the correlation between the overall average of strategic
alignment maturity and average competitive advantage measure (- 0.07) which is very close
to zero indicating that there is no correlation between the two variables.
 Communication and governance maturity shows above medium and low negative
correlations respectively.
 A low positive correlation of skills maturity with very low determination coefficient.
 No correlation with partnership and scope – architecture maturity.

Table 6.5: analysis of IT and telecommunication services industry group

COMP# COM VAL GOV PAR SCP SKL SA CA
4 3.75 4.00 4.43 4.30 5.00 4.56 4.31 4.00
10 4.38 3.75 4.00 3.50 3.75 3.56 3.81 3.29
20 3.13 3.25 2.86 3.00 3.00 3.11 3.05 3.57
11 2.63 1.75 2.57 2.40 2.75 2.33 2.43 4.29
12 4.13 2.50 3.71 3.20 3.75 2.56 3.31 1.29
Correlation
-0.60 0.12 -0.24 -0.02 -0.08 0.32 -0.07
coefficient
Determination
0.36 0.01 0.06 0.00 0.01 0.10 0.01
coefficient

Analysis of consulting and engineering services industry group

The correlation and determination coefficients presented in table 6.4 indicate the following:
 Very high correlation between the overall average of strategic alignment maturity and
average competitive advantage measure supported by a high value of determination
coefficient.
 Governance, partnership, and scope – architecture maturity show nearly perfect positive
correlation, followed by a high positive correlation for competency/value and skills maturity.
 Low negative correlation with communication maturity with low coefficient of
determination, this negative maturity did not affect he overall alignment maturity
correlation due to the very high values of the other alignment factor groups.

Table 6.6: analysis of consulting and engineering services industry group

COMP# COM VAL GOV PAR SCP SKL SA CA
8 3.13 4.00 4.71 4.80 4.75 4.67 4.36 4.29
13 3.88 3.25 2.86 2.80 2.75 3.56 3.21 2.14
21 3.00 3.00 3.29 3.60 3.00 2.78 3.14 2.86
22 4.00 4.00 3.86 4.40 4.00 3.78 4.02 3.43
Correlation
-0.37 0.78 0.99 0.98 0.97 0.72 0.91
coefficient
Determination
0.14 0.61 0.99 0.96 0.95 0.53 0.83
coefficient

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6.5 Summary
The analysis of the data sample collected using the questionnaire instrument was demonstrated
throughout this chapter, using the correlation coefficient and coefficient of determination to
indication the strength of the relationship between the overall average of alignment maturity and
the average of competitive advantage measure, also the relationship between the maturity of each
alignment factors group and competitive advantage was studied. The same analysis was carried out
on the level of the complete data sample and each industry group, except for the cement and steel
industry group as there is a single instance of data available for this group.

Running the analysis to the complete set of data indicated the presence of medium positive
correlation between overall average strategic alignment maturity and average competitive
advantage measure, skills maturity correlation was above medium supported by medium coefficient
of determination, competency/value and scope-architecture maturity had medium correlation
coefficient values but with very low determination coefficient values indicating lower effect, and
finally the communication and governance maturity showed very low correlation.

Analysing the industry groups revealed that the consultancy and engineering industry group had the
highest correlation values, followed by the advertisement and media industry group, then comes
banking and finance industry group with medium correlation, and surprisingly the correlation was
very low in the IT and telecommunication services industry group.

It was also noticed that all surveyed organisations with average score for overall alignment that was
equal to four or higher, had selected one of the choices agree or strongly agree to the ability of
information systems to either provide the option to create a new product / service, present a
product / service differentiation with respect to competitors, or impact customer’s decision to
switch to your firm’s products / services.

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Chapter 7 Conclusion

This chapter presents the conclusion for the research questions, findings, complemented with
definition of known limitations and suggestions for future work.

7.1 Research conclusion

The main objective of this research was to examine the relationship between business –information
systems strategic alignment and the competitive advantage gained from information systems, by
investigating the concept of strategic alignment, then examining the factors proved to influence
strategic alignment, and finally constructing a measurement instrument to measure strategic
alignment maturity effect to competitive advantage gained from information systems.

An extensive literature review for the concept of strategic alignment was conducted through chapter
three to explore how the term strategic alignment was defined in related academic literature, we
can conclude from this study now that strategic alignment can be defined as:

The linkage between goals and objectives of business and information systems on strategic, tactical,
and operation activities levels, this linkage should be present in both business and information
systems planning, with clearly defined management processes to guarantee this linkage and to work
on improving harness the relationship between business and IS practices.

Through chapter three, factors influencing alignment were thoroughly explored to answer the
second question of the research, the alignment factors mentioned in the study were previously
examined by other researchers and proved to have direct influence on strategic alignment, this step
was the basis for the work done in chapter five to extend Luftman (2000) strategic alignment
maturity model (SAMM) with additional alignment factor set in order to enhance the measurement
experience and cover some of the topics that the original model ignored and which were proved to
have an impact on alignment.

The literature review of the competitive advantage concept was covered through chapter four,
presenting the definition of competitive advantage and sustainable competitive advantage, with a
demonstration of Porter’s five forces model, competitive strategies, and the value chain model. The
chapter also discussed the relationship of information systems and its alignment to business with
competitive advantage, and finally some of the strategies for gaining competitive advantage from
information systems were discussed.

Chapter five included the construction of the complete set of alignment factors, by finding the
factors common with those originally presented by SAMM, and suggest the needed factors to extend
the model, using the same alignment factor groups from the original SAMM, and then based on the
complete set of factors, a list of forty two questions to measure alignment maturity was introduced,
divided into the six major alignment factor groups: communication, competency – value
measurement, governance, partnership, scope – architecture, and skills.

The second part of chapter five listed seven questions to be used for the competitive advantage
measurement in the questionnaire, these questions were built on the basis of the strategies to gain

Page | 52
competitive advantage from information systems, and the five forces model of Porter which were
both discussed in chapter four.

The final step in this research was to test the proposed questionnaire constructed through chapter
five, to collect empirical data in order to answer the main question of the research of how strategic
alignment affects competitive advantage provided through information systems. The empirical study
presented in chapter six, analysed data collected using the questionnaire instrument, provided
explanation of the process of data collection and data analysis, and used the correlation coefficient,
and coefficient of determination to statistically examine the relationship in question.

The analysis of data collected in the empirical study showed that a positive correlation is present
between strategic alignment and competitive advantage, however that positive correlation indicated
medium strength of the relationship on the level of the complete data set. The relationship varied
from one industry group to another, showing medium strength in the banking and finance segment
which represented the largest segment of the studied companies, a very strong correlation in the
consultancy and engineering segment, a less strong correlation in advertising and media industry
segment, and a very low correlation in the information technology and telecommunication services
industry segment, which could be against what one may think.

The complete data set examination showed that partnership and skills had the highest impact on
competitive advantage, while on the level of each industry group the correlation between each
alignment factor group and the average of competitive advantage measure varied.

This research contributed by clearly define what is strategic alignment from literature perspective,
what are the factors that influence alignment, provided an extended set of alignment factors
mapped to the strategic alignment maturity model to test alignment maturity, introduced a
questionnaire instrument to examine the relationship between strategic alignment and competitive
advantage, and finally conducted an empirical study to investigate the relationship in question in the
Egyptian private-sector market.

7.2 Limitations
Applying the same set of questions to all industries represent a limitation to this research, as
studying the organisation’s industry to prepare specific questions will enhance the measurement
specially in the competitive advantage side.

Another limitation of the empirical study in this research is the small set of empirical data available,
as only 22 companies participated, a more intensive data collection for industry groups studied and
other industry groups will give better indication for the relationship investigated. The single
perspective for collected data represents a limitation too, as it wasn’t available to run the same
questionnaire with people from different backgrounds in the same organisation, it will be really
effective if the respondents included people from different backgrounds including business and
information systems.

7.3 Future work

Doing an industry specific research is suggested as future work, this could start by industry analysis
to include more specific competitive advantage measures, also a financial analysis for the industry
segment and organisations in research can reveal more facts.

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Surveying a large number of organisations would give higher credibility to the outcomes of the
analysis; including technical discipline of participants in the analysis would give some perspective
indications.

Future analysis could be done using the same questionnaire to reveal the relationship between a
single alignment factor and a selected competitive advantage strategy; this could give great benefit
for organisations to know what to concentrate on, but again this need an intensive amount of data
in order to trust the predictions conducted using regression analysis.

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Appendix A: Questionnaire

Participants were asked to respond to each question by selecting a value from 1 to 5 where 1 means
strongly disagree, and 5 means strongly agree.

Following is a complete list of questions:

Communication  Information technology executives and employees understand

organisation's business.
 Business managers and non-information technology employees
understand information technology.
 Organisation’s business domain knowledge is well-shared to different
business divisions including information technology division.
 Consistent bidirectional (two-ways) communication between business
and IT executives exist
 Senior management is familiar with IT and committed to formulate
informed expectations regarding information technology
 Organisation’s culture encourages learning from former experiences,
problems, and challenges of previously conducted IT-related decisions
and projects.
 An effective liaison person between business and IT exists to facilitate
communication.
 Previously conducted IT projects and implementations in your
organisation were concluded with success and achieved expected goals.
Competency  A formal business and IT assessment, reviews, and measurement
and value standards are employed and used on regular basis for continuous
measurement improvement.
 Business and IT metrics (assessment and measurement) are integrated.
 A service level agreement or a similar arrangement exists between IT
and business units to assure quality of delivered IT services.
 Business users are generally satisfied regarding available IT services.
Governance  CIO / CTO / Head of IT division reports directly to CEO / MD or highest
ranked senior manager.
 IT investment decisions follow a structured and governed process.
 Accepted IT governance standards are implemented and followed
throughout all levels of the organisation.
 Planning activities is highly sophisticated, strategic plans are properly
documented.
 Business can clearly define strategic goals that are related to
information technology.
 Prioritization and selection of IT projects is done collaboratively by
senior management and IT executives.
 IT projects are executed according to previously defined business
priorities.
Partnership  Information technology is considered as an enabler and strategic
partner to business.
 IT executives formally participate in strategic business planning (being
part of planning activities as a committee member for example).
 Business executives participates actively in IT strategic planning.

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  IT expenditure is considered as an investment not just as a cost centre.
 A portfolio and program management approach is used to manage IT
projects.
 Mutual trust exists between IT division and other business divisions.
 Business sponsors IT projects and provides support when needed.
 IT staff is part of incentives and rewards program of your organisation.
 Information systems staff co-exists with business employees, cross-
functional work teams exist.
 Information technology goals and objectives are linked to business
strategic plan.
Scope and  Information technology is integrated to all business level (example:
Architecture business applications are available on functional, organisation, and
inter-organisational levels)
 Information systems architecture is flexible and can respond well to
changes in business (example: existing business applications supports
the creation of new business product, change in work rules, or
regulations).
 Integration between different information systems and business
applications exists, need of manual data manipulation is limited
(information exchange between different applications is automated).
 Information systems staff offers solutions to business users’
requirements and needs.
Skills  Organisation’s environment encourages innovation and
entrepreneurship.
 Information systems staff offers innovative ideas regarding strategic use
of IT.
 Management style is collaborative and considers goals, outcomes and
profits.
 Organisation is ready to change (low resistance to change), and
proactive to dynamic market conditions.
 Education and cross training is available through the whole
organisation.
 Suitable training and skill improvement for IT staff is available.
 Information technology employees are current with technology
evolution.
 CIO and IT staff long-serviced the organisation, generally they have low
turn-over.
 IT shows strong leadership.

Competitive  Information technology - related projects, implementation of computer-

Advantage based information systems, and business applications helped to Lower
the cost of firm’s product / service.
 Information technology - related projects, implementation of computer-
based information systems, and business applications helped to Provide
the option to create a new product / service.
 Information technology - related projects, implementation of computer-
based information systems, and business applications helped to Present
a product / service differentiation with respect to competitors.
 Information technology - related projects, implementation of computer-
based information systems, and business applications helped to Build

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 barriers to keep potential competitors from joining the market.
 Information technology - related projects, implementation of computer-
based information systems, and business applications helped to Change
the balance of power with organisation's suppliers.
 Information technology - related projects, implementation of computer-
based information systems, and business applications helped to Impact
customer’s decision to switch to your firm’s products / services.
 Information technology - related projects, implementation of computer-
based information systems, and business applications helped to
Increase the cost of switching to other competitors.

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Appendix B: List of tables

Table 5.1 Alignment factors summary

Table 5.2 Alignment maturity criteria attribute from Luftman (2000)
Table 5.3 Mapping of alignment factors to SAMM factor groups.
Table 5.4 Extended alignment factors
Table 5.5 Questions used to evaluate alignment level of each factor group
Table 5.6 Questionnaire items to evaluate competitive advantage from information systems
Table 6.1 Survey participants by industry
Table 6.2 Summary of average calculations
Table 6.3 analysis of banking and finance industry group
Table 6.4 analysis of advertising and media industry group
Table 6.5 analysis of IT and telecommunication services industry group
Table 6.6 analysis of consulting and engineering services industry group

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Appendix C: List of figures

Figure 3.1 Information Systems Components (Stair and Reynolds 2008)

Figure 3.2 Top 10 IT Management Concerns by SIM Respondents, 2003-2010. Reprinted from
Luftman and Ben-Zvi (2010).
Figure 3.3 Strategic Alignment Model (Henderson and Venkatraman, 1993)
Figure 4.1 Porter’s five forces model
Figure 4.2 Michael Porter’s value chain activities
Figure 5.1 Strategic alignment maturity scale summary (Luftman and Kempaiah, 2007)
Figure 6.1 Survey participants by industry
Figure 6.2 scatter diagram showing relationship between average strategic alignment maturity
and average competitive advantage
Figure 6.3 scatter diagram showing the relationship between average communication maturity
and average competitive advantage
Figure 6.4 scatter diagram showing the relationship between average competency-value maturity
and average competitive advantage
Figure 6.5 scatter diagram showing the relationship between average governance maturity and
average competitive advantage
Figure 6.6 scatter diagram showing the relationship between average partnership maturity and
average competitive advantage
Figure 6.7 scatter diagram showing the relationship between average scope and architecture
maturity and average competitive advantage
Figure 6.8 scatter diagram showing the relationship between average skills maturity and average
competitive advantage

Page | 59
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