Analysing Business-IT Alignment in the IT Outsourcing Context

A Case Study Approach

Ekaterina Sabelnikova

, Claudia-Melania Chituc

and Jos Trienekens

Océ, Venlo, The Netherlands

Eindhoven University of Technology, Eindhoven, The Netherlands

Keywords: Business-IT Alignment, IT Outsourcing, IT Outsourcing Maturity, Case Study.

Abstract: Information technology plays an increasingly important role in developing business strategies.

Consequently, it is vital for organizations to ensure an alignment between IT and business strategies and

goals. Usually business-IT alignment (BIA) is understood at the organizational level between business and

IT teams, whereas IT outsourcing (ITO) extends organizational boundaries and implies inclusion of service

providers. In the case of ITO, BIA is harder to achieve and manage. In this paper it is proposed to measure

ITO maturity through a set of factors that influence the success of ITO activities, while a selected BIA

maturity framework has been extended with two additional dimensions. The combined BIA-ITO model has

been applied in a case study, with the purpose to empirically validate the model as well as to gain valuable

insights on the BIA-ITO relationship in practice. The results indicate that IT outsourcing can have a positive

impact on business-IT alignment.



1 INTRODUCTION

Over the last decades the role of information

technologies (IT) has changed significantly from a

business support function to a vital component of

organizational strategy. Many companies realize that

the alignment of IT and business is a managerial

priority for solving organizational and business

challenges (Tallon & Kraemer, 2011).

In the highly competitive market environment

companies need to determine their core

competencies and focus on delivering their primary

services to customers. As such, non-core activities

are outsourced to external vendors. In the research

project pursued and presented in this article,

outsourcing is scoped to IT outsourcing (ITO),

defined as the practice of transferring internal IT

services to an external provider. Being specialized in

this area, external providers can offer services with

lower cost and higher quality.

Although bringing advantages (e.g., (Ang &

Straub, 1998; Craig & Willmott, 2005)), outsourcing

of the internal IT services to an external supplier

influences the complexity of the business-IT

alignment (BIA). Traditionally, business-IT

alignment is seen at the organizational level as the

collaboration of two parties within one company –

IT and business teams, while IT outsourcing

expands the boundaries and implies inclusion of a

third party, namely the IT service provider.

Consequently, BIA is affected by the business

processes, management practices and characteristics

of a service provider. As a result, alignment

becomes more challenging to achieve and manage.

The review of previous studies revealed that the

combination of BIA and ITO is not extensively

explored and, in general, insufficiently understood

(e.g., (Pollalis, 2003; Derksen, 2013)). The research

project presented in this article aims at advancing

the research in the area of business-IT alignment in

an IT outsourcing context. The goal of the research

project pursued is to analyze and assess the

business-IT alignment in organizations outsourcing

IT resources. In order to achieve this goal we need to

design a model which helps to evaluate, what we

will call, the BIA maturity in an IT outsourcing

situation. The proposed model was subsequently

validated with four case studies. The collected

information allowed the elaboration of a set of

recommendations for further development of a

questionnaire for a broader research using a survey

method.

This paper is structured as follows. The next

section contains a summarized review of relevant

Sabelnikova E., Chituc C. and Trienekens J..

Analysing Business-IT Alignment in the IT Outsourcing Context - A Case Study Approach.

DOI: 10.5220/0005326200050016

In Proceedings of the 17th International Conference on Enterprise Information Systems (ICEIS-2015), pages 5-16

ISBN: 978-989-758-096-3

 2015 SCITEPRESS (Science and Technology Publications, Lda.)

concepts. Section 3 briefly presents the methodology

followed in this paper. Section 4 introduces the

approach used to select ITO factors that influence

the maturity of IT outsourcing activities and justify

the selection of the most appropriate BIA reference

model, considering the aim of the current research

project. In Section 5 the combined BIA-ITO model

is presented. The findings of the case study, where

the BIA-ITO model has been applied, are presented

in Section 6. Section 7 addresses a discusion of the

results, reflects on related work and the added value

of the proposed BIA-ITO model. The paper

concludes with a section summarising the results and

addressing the needs for future research.

2 BACKGROUND

An in-depth literature review was pursued to identify

and analyse the most relevant approaches on BIA

and ITO, ITO reference models and BIA

frameworks and measurement models.

Topics of BIA and ITO are studied broadly by

scientists and practitioners. However, the review of

previous studies revealed that the combination of

BIA and ITO has not been addressed in a conceptual

and systematc way, in spite of the fact that IT

outsourcing can significantly affect the stable

relationship between business and IT. This research

gap is a focal point in this paper.

2.1 BIA and ITO

Dutta (1996) performed a study focusing on two

banks with diametrically opposite strategies of

aligning IT with business: one bank manages IT in-

house, while the second bank completely outsourced

all of its IT functions. This study describes the

approach used by each bank to ensure BIA, and

presents as one of its main conclusions, drawn from

a comparative analysis, that physically IT can be

outsourced, but it is not possible to outsource the

management of IT.

Similarly, Cumps et al. (2006) conducted a

comparative theoretical study with two imaginary

scenarios in order to examine the likely impact of

outsourcing on BIA. The result of this study is a

theoretical proposition stating that in organizations

where IT is of high strategic importance,

outsourcing will determine both more formal and

informal alignment structures and processes between

the organization outsourcing IT services and the

supplier organization. Although this study provides a

valuable theoretical reflection on IT outsourcing and

BIA, it is not supported by empirical evidence.

Additionally, both topics of BIA and ITO are closely

related to practice, so they have to be analyzed not

only from a theoretical perspective but also linked to

practical data.

Pollalis (2003) derived data from 127 global

commercial banks. The results show that

outsourcing affects performance positively as long

as the implementation of IT is consistent with the

needs of business. This study appears to be related to

the goal of the research in this paper. However, the

major drawback is that the author described neither

the methodology of the research nor the undertaken

survey, therefore it is impossible to repeat his

experiment and justify the derived results.

The study of (van Lier & Dohmen, 2007)

addresses the influence of strategic alignment and

cost/ benefit management on ITO success.

Luftman’s alignment maturity model (Luftman,

2000) is used to evaluate the maturity of the

alignment, though the authors slightly modified the

approach: Luftman’s approach stresses that

company’s executives should determine the level of

strategic alignment, while van Lier and Dohmen

(2007) asked an external observer to define this level

saying that an external observer has fresh and clear

vision of the situation. However, in order to

determine the level of strategic alignment the

observer should have an in-depth knowledge and

clear understanding of the situation in the company

and its processes (Luftman & Brier, 1999).

Therefore, the results of this study can be considered

as subject of much controversy.

A qualitative study performed to analyze the

relationship between ITO and BIA is described in

(Silvius et al., 2013). The authors concluded that a

higher level of motivation for outsourcing paired

with a higher level of the relationship between

outsourcer and service provider, and with a higher

level of alignment maturity of the outsourcer. This

study also revealed that the ITO relationship is

influenced by organizational turbulence on one or

either side of the relationship and the service

providers lean towards assessing the relationship on

a higher level than outsourcers.

The analysis of the available studies shows the

need for a more in-depth exploration of the

relationship between BIA and IT outsourcing. This

work aims to explore this relationship, with a

rigouros scientific method.

ICEIS2015-17thInternationalConferenceonEnterpriseInformationSystems

2.2 BIA Frameworks and

Measurement Models

In this section the most frequently cited business-IT

alignment frameworks are shortly introduced.

The strategic alignment model proposed by

Henderson and Venkatraman (1993) is a foundation

model for a vast number of studies, and several

authors take it as a basis for constructing their own

frameworks, e.g., the Integrated Architecture

Framework of (Goedvolk et al., 1997) and Unified

Framework of (Maes et al., 2000). These models

provide abstract views on alignment but do not

suggest operational guidelines or best practices to

assess strategic alignment.

Luftman (2000) proposed a model to evaluate the

company’s alignment maturity level. The model

advances 38 attributes grouped in six dimensions to

support the assessment of the maturity level of BIA:

communications, value measurements, governance,

partnership, technology scope and skills. For each

dimenstion there are clearly defined maturity levels.

All areas should be given attention to mature the

alignment between business and IT. A practical

instrument which uses five levels of BIA maturity is

also provided.

Reich and Benbasat (2000) view alignment as

the linkage of intellectual and social aspects of an

organization. A measurement method was developed

for the social dimension. Although it represents an

important advancement in this area, this model does

not completely cover the full concept of BIA. It

considers alignment within only two dimensions

(social and intellectual). However, these two

dimensions do not fully capture the complexity of

the relationships in companies, especially in the

context of BIA. Additionally, no evidence of

applying this model in practice was found in the

literature.

Sabherwal and Chan (2001) elaborated a model

of fit between business strategies and IT strategies.

Authors study the relationship between business

strategy and IT strategy using Miles and Snow’s

(1978) classification of defender, analyzer, and

prospector business strategies.

The state-of-the-art review performed on topics

related to the impact of IT outsourcing to strategic

alignment allowed us to identify shortcomings of

existing works and the need to further explore these

topics. Research on assessing the influence of IT

outsourcing on BIA is scarce, and no generally

accepted model for evaluating the effects of IT

outsourcing on BIA was found in the literature.

Hence, this paper aims to advance a model and

validate it empirically with the data from four case

studies.

3 METHODOLOGY

The research approach is illustrated in Figure 1. The

literature review stage is based on an extensive

literature analysis where ITO factors have been

selected and BIA frameworks have been evaluated

on the basis of a set of pre-defined criteria.

In line with the undertaken analysis, a

hypothetical combined model for evaluating BIA

maturity in an IT outsourcing situation has been

developed, based on the concepts adapted. The ITO

maturity was measured on the basis of a set of

factors which are identified through literature review

and field experts’ opinions. The selected BIA

framework was then complemented with two

dimensions. Subsequently the combined model has

been empirically tested by using a case study

method. The empirical investigation served to

validate the combined model, as well as to gain

practical insights with respect to the interrelations

between BIA and ITO. The last part of the research

addresses the analysis of the results. During this

step, the collected information has been analysed

and the findings are presented.

Figure 1: Research methodology.

4 REFERENCE MODEL

SELECTION AND

ASSESSMENT

This section seeks to find the proper mechanisms to

measure ITO and BIA maturity levels. These

mechanisms will be further used to design a model

for measuring business-IT alignment in an IT

outsourcing situation.

4.1 IT Outsourcing Factors

The objective of this section is to elicit factors that

are important to be managed within the organization

in order to reach high maturity in IT outsourcing

activities. This part of the research work was based

on the literature research and discussion with

experts. There is an abundant discussion among

AnalysingBusiness-ITAlignmentintheITOutsourcingContext-ACaseStudyApproach

computer scientists and business managers about

critical success factors which underpin effective

management of IT outsourcing (Alborz, Seddon &

Scheepers, 2003). Many research studies have

addressed success factors in IT outsourcing, e.g.,

(Beaumont & Sohal, 2004); (Gonzalez, Gasco &

Llopis, 2005); (Ishizaka & Blakiston, 2012); (Smuts

et al., 2010); (Cullen & Willcocks, 2003); (Oza et

al., 2004); (Tan, 2009).

These studies have passed a thorough

examination. Firstly, the factors identified in each

scientific paper were selected. At the second step the

complete list of factors had been sent to the

managers of companies with ongoing IT outsourcing

activities. Three managers of companies that had on-

going ITO activities reviewed a predefined set of

ITO factors retrieved from the literature research

(ten, in total), and provided their opinion, indicating

which factors are important in practical conditions.

During the third and final step, the factors with the

same or similar meaning were grouped. For instance,

factors related to communication, client-provider

contacts, understanding each other were grouped

under Relationship management category.

This revision led to the elicitation of seven

factors which can be considered to influence the

success of ITO activities. These factors are: contract

management, performance management, preparation

step, outsourcing strategy, governance, relationship

management, and knowledge management. Three

other factors identified in literature (change

management, risk management and internal

readiness) received low importance from the

practitioners and where discarded.

4.2 Business-IT Alignment Model

Selection

After choosing the tool for IT outsourcing, an

appropriate mechanism for measuring the business-

IT alignment maturity level needs to be defined.

Four business-IT alignment maturity frameworks

have been presented in Section 2.2. In the context of

this research the most important aspect is the

measurability of business-IT alignment. The

comparative analysis result of the frameworks is

presented in Table 1. The following aspects were

considered when analysing the BIA maturity

frameworks: weather the framework is derived from

theory or practice, the size of the organization,

dimensions of the framework, measurement tool

used, and the complexity to use and apply the

maturity framework.

In (Reich & Benbasat, 2000) alignment is seen as

a linkage of two dimensions – intellectual and social

aspects. A measurement tool is proposed for the

social dimension, which is based on the interviews

with experts and review of documentation.

Therefore, it does not reqire any specific knowledge,

and is simple to use and apply in the organizational

context. However, this model does not completely

cover the full concept of business-IT alignment and

has a too narrow scope for assessing BIA in

companies (Mekawy, Rusu & Ahmed, 2009).

Another reason of exclusion is that no evidence of

applying this model in practice is found in the

literature.

The model advanced by (Sabherwal & Chan,

2001) studies alignment as a cooperation between

business and IT dimensions, and does not suggest

any measurement tool. This view of alignment can

be considered too generic for the purposes of the

current research, since it does not allow to evaluate

BIA maturity within a company. According to

(Mekawy, Rusu & Ahmed, 2009) this model is

applicable only to small and medium size

organizations. Additionally, with respect to the

complexity criterion, this model applies the Miles

and Snow’s (1978) typology of business strategies,

which is a complex concept to understand and apply.

Consequently, the model of Sabherwal and Chan

(2001) is not suitable as a reference framework in

this research project.

The strategic alignment model of (Henderson &

Venkatraman, 1993) provides an abstract view on

alignment based on the four dimensional model.

This model has an extensive theoretical evidence

and is also applied in practice for understanding the

BIA concept. The description of the model is

extensive, therefore the complexity of usage is

medium. However, this model does not provide a

measurement tool and can not be used for further

empirical research.

Luftman’s model (2000) represents a practical

measurement instrument based on six dimensions

and 38 attributes. BIA assessment uses five levels of

BIA maturity. The attributes have extended

descriptions and the measurability of the five levels

is clearly defined. Luftman elaborated a

questionnaire which provides the opportunity to

define the level of BIA maturity in a company.

The model is not too complex and all experts are

able to gain insights into it. Scientists vastly use this

model for their research (e.g., (Khanfar &

Zualkernan, 2010), (Ekstedt et al., 2005)). These

considerations make Luftman’s framework the most

suitable approach for the present research.

ICEIS2015-17thInternationalConferenceonEnterpriseInformationSystems

Table 1: Evaluation of BIA maturity frameworks.

Henderson and

Venkatraman (1993)

Luftman (2000)

Reich and Benbasat

(2000)

Sabherwal and Chan

(2001)

Theoretical /

practical evidence

Theory, Practice Practice Theory Theory

Organizational size

Small / Medium /

Large

Small / Medium /

Large

Small / Medium Small / Medium

Dimensions

4 dimensions

12 components

6 dimensions

38 attributes

2 dimensions 2 dimensions

Measurement tool Not provided

Quantitative

questionnaire

Interviews and

documentation

Complexity of use

and apply

Medium Medium Simple Complex

Based on a comparative analysis, Luftman’s

framework has been selected as the most valid one

for this research and will be used to evaluate the

maturity level of BIA in organizations. However, it

needs to be enhanced in order to reflect the

complexity of the relationships in an organization

and support the assessment of the BIA maturity level

in an organization, in the ITO context.

5 THE DESIGNED MODEL

The extensive literature review showed that

Luftman’s alignment maturity assessment model

(2000) is directly applied in the other studies without

attempts to refine it. Most of the available studies

focus on the alignment of business and IT strategies,

plans, and goals (so called intellectual alignment).

However, nowadays the employees are the most

important asset in organizations (Gabcanova, 2011).

Alignment is a continuous process and an alignment

model needs to keep up with the dynamic pace of

business changes. Luftman’s model does not

consider the employee engagement as an important

aspect of BIA, while we propose to include it in the

model and evaluate alongside other six dimensions.

Information systems have evolved from an

operational tool to a competitive and strategy

element. Technological advances, such as business

intelligence, product lifecycle management, and

knowledge management systems, are also changing

the way organisations conduct their business.

Therefore it is important to gain insights into

alignment of the information systems and business

goals.

Though Luftman’s model provides strong

coverage of a considerable number of dimensions, it

does not tackle important aspects of alignment, such

as Employee engagement and Technology scope, and

therefore an extension of the model could be

elaborated, addressing these aspects.

5.1 Employee Engagement Dimension

(Reich & Benbasat, 2000) consider the business-IT

alignment concept as the linkage of intellectual and

social dimensions. The social dimension of

alignment addresses such aspects as a mutual

understanding and the quality of communication

between business and IT teams, and awareness of

regular employees about the strategic goals and

plans.

Literature analysis revealed that the importance

of social alignment is rarely addressed in scientific

studies. In (Preston & Karahanna, 2009) it is argued

that often the tension between IT and business is a

result of ineffective collaboration and

communication, rather than technological

constraints. The authors conclude that solving the

problem of social alignment will contribute to the

technological alignment, increase the value of IT in

business and improve BIA in general.

Social alignment is a complex construct which

should be addressed at both strategic and non-

strategic levels. Luftman’s model covers social

dimension at the strategic level, while social

alignment should be realized at all levels from

owners to regular employees. When regular

employees understand strategic goals and plans then

they know how they can contribute to those

objectives (Boswell, Bingham & Colvin, 2006).

Lower-level employees’ awareness of company’s

strategy increases the possibility that the strategy

will be executed correctly. At the same time,

communication of the strategy to the regular

employees can improve their trust and commitment

to the company, which in turn can produce more

positive work-related outcomes (Boswell &

Boudreau, 2001).

The proposition is that Employee engagement

dimension should be considered along with the six

dimensions of Luftman’s model in order to reflect

AnalysingBusiness-ITAlignmentintheITOutsourcingContext-ACaseStudyApproach

the complexity of the relationships of business-IT

alignment.

5.2 Technology Scope Dimension

Belfo and Sousa (2012) undertook a critical review

of Luftman’s model. The main critique point is that

technology dimension is not addressed in the full

extent though it is partially covered in the Scope and

Architecture criterion. Luftman considers the

technology factor by measuring the degree to which

IT is able to provide a flexible and transparent

infrastructure, apply emerging technologies, and

drive business processes and strategies. However,

this view does not fully capture the complexity of

the BIA relationships especially in the context of

ITO. Additionally, it does not address how IT

projects impact the achievement of specific business

goals.

Organizations implement new information

technologies with the purpose of accomplishing

specific needs and goals. For example, financial

institutions use process mining tools and

technologies in order to identify the most profitable

clients and target them with specialized services.

Such tools and information systems need to be

aligned with the organization’s specific business

goals and plans. By extending Luftman’s model with

the Technology scope dimension, the novel model

elaborated within the scope of this research project

would benefit from evaluating the contribution of

domain-specific information systems to the business

objectives.

In this section the instrument for measuring

business-IT alignment maturity is completed by

adding two dimensions: Employee engagement and

Technology scope. It was justified that both of them

have strong impact on aligning business and IT

strategies and goals. The advanced model captures

the complexity of the BIA relationships in the

context of ITO, providing a holistic view. Figure 2

illustrates the proposed model.

6 CASE STUDY VALIDATION

6.1 Set up of the Empirical Study

A case study approach was conducted in four

companies. (Note! For privacy reasons, the names of

the companies are not provided. However, a brief

description of each company is available in Section

6.2). Characteristics of the companies and

respondents can be found in Table 2, reflecting the

following aspects: industry sector, number of

employees, position of the respondent within the

company, and the role of IT. The data collection

strategy was based on semi-structured interviews

and an on-line questionnaire.

The questionnaire was used to derive scores of

BIA and ITO in companies. The alignment maturity

level is evaluated based on eight dimensions,

reflected in the model developed, illustrated in

Figure 2. The six dimensions of the Luftman’s

model are converted to questions using the

explanations provided by (Luftman & Kempaiah,

2007). Employee engagement and Technology scope

dimensions consist of a number of statements taken

directly from the works of (Chong et al., 2011) and

(Sabherwal & Chan, 2001) respectively. The

maturity of the ITO is measured through a set of

factors, which - for the purpose of validation - are

converted to statements. In the questionnaire, each

short statement reflects the whole meaning of the

factor. It should be noted that the questionnaire

development is at the preliminary stage. Therefore,

one of the objectives of the empirical study is to

validate the quality of the questionnaire, and receive

recommendations for improvements. Afterwards, the

improved questionnaire can be used in the survey

method. In the survey method, the questionnaire is

the main source of data collection, and a properly

constructed questionnaire is crucial for the success

of the research.

The reliability of the case study is assured by

applying the same procedure on every case. All the

interviews were conducted in the same manner

based on the beforehand designed guidelines. In

order to increase the reliability of responses,

respondents were assured that their answers and

provided information will be treated strictly

confidentially. Internal validity of the empirical

evaluation is assured by the fact that data was

collected from managers and executives, who area

actually the most familiar with the situation within

the company and most knowledgeable in providing

the correct answers for the interview questions and

questionnaire.

6.2 Case Descriptions

Company A is a Dutch based company which

provides logistic support for information flows

between client companies and Dutch sea ports. The

company’s main product is an efficient information

exchange service between multiple involved parties,

both public and private. Therefore, the company is

highly IT focused, and the IT function is the central

ICEIS2015-17thInternationalConferenceonEnterpriseInformationSystems

Figure 2: Designed model (Source: (Sabelnikova, 2014)).

Table 2: Case study characterictics.

Company

Criterion

Company A Company B Company C Company D

Industry Logistics Finance Consultancy Technology

# of employees 50-200 2000+ 2000+ 500-2000

Function of the respondent Enterprise architect IT IT Business

Role of IT Critical Critical Very important Very important

core of the uninterruptible operations running.

Company B is a Dutch multinational financial

corporation. The company provides the range of

financial services, such as banking operations,

investment banking, loans and mortgages, insurance

services. The information technologies are the core

of the business operation. All daily operations are

dependent on smoothly running IT. Company B is

currently in transformation from a bank to an IT

company which delivers financial services.

Company C is a French multinational

consultancy company. It mainly focuses on the IT

consulting services. Information technologies are

reported to be very important since without their

availability it would be impossible to conduct

business processes in place and provide customer

services at the high level. IT performs supportive

functions and does not have significant impact on

strategic business planning.

Company D is a Japanese imaging and

electronics company with a worldwide presence,

with subsidiaries in The Netherlands. The company

now is in the process of transferring governance of

the IT department to the European headquarter. The

local IT department is responsible for first-line

support issues, while critical disruptions are handled

from Europe.

6.3 Analysis of the Case Study Results

This section analyses the data with the goal of

finding the correlation between ITO and BIA scores.

This analysis is built upon the data received during

the interviews and data from questionnaires. The

structure of the interview and examples of questions

in each category are provided in Appendix A, as

well as one sample page of the on-line questionnaire

(Figure 3). Table 3 outlines the scores of BIA and

ITO for each company derived from the

questionnaire. It could be seen that Company D has

a high maturity of ITO, but the alignment level is the

lowest among the four companies.

Company B shows the highest score of alignment

and ITO maturity. The interview displayed that the

company is aligned across eight dimensions as well

as ITO factors are elaborated thoroughly. The

respondent emphasized that for large companies the

preparation step of ITO is crucial because later it

will take more time and money to change a provider.

Therefore, the process of provider selection was

IToutsourcing

Luftman’s

model

Commu‐

nication

Value

Govern‐

ance

Partner‐

ship

Scope&

Architec‐

ture

Skills

Business‐ITalignment

ITOmaturity

Contractmgt.

Performancemgt.

Preparationstep

impact

Outsourcingstrategy

Governance

Knowledgemgt.

Relationshipmgt.

Employee

engagement

Technology

scope

AnalysingBusiness-ITAlignmentintheITOutsourcingContext-ACaseStudyApproach

Table 3: Scores of ITO and BIA.

Company

Score

Company A Company B Company C Company D

ITO maturity score 2,58 3,92 2,36 3,25

BIA maturity score 2,83 3,79 2,46 2,33

The score level ranges from 1 to 5. The maximum score level is 5

done thoroughly and carefully. The contract is very

detailed and describes formal procedures in the case

of violations.

Performance of service provider and quality of

services are measured upon several tollgates. The

provider might pass them all to ensure appropriate

level of delivered quality. Relationships with

outsourcer are mainly based on the contract,

personal connections are not supported

With respect to BIA, Company B is the only

company where IT fosters discussions about the

added value, the reasons behind the requests, how

they can increase customer satisfaction. The

projects, which worth of investments, are chosen in

virtue of best value for business and best feasibility

for customers. For example, if the customer has

problems with on-line banking, this project is

prioritized over others. Company’s B strategies are

formulated with the equal participation of IT and

business teams. IT outsourcing had a significant

effect on the Skills dimension. Engagement in ITO

activities provided a possibility to redirect the staff

from the IT department to areas they are more

skilled in. Employee engagement alignment is

assessed at the highest score. The respondent has

high satisfaction with his work and pride in his

employer, the employee has the perception that the

company values what (s)he brings to the table.

Company A has lower level of alignment and the

level of ITO is less mature. The interview revealed

several reasons of not yet fully mature ITO

activities. Contract management factor is ranked

very low, at the level 1. The company reports that it

is nearly impossible to capture all scenarios from the

beginning; otherwise they would formulate the

contract requirements much sharper. As a part of the

Governance factor, the company especially

emphasizes the importance of monitoring and

adjusting the requirements in the contract. The

Relationship management factor is on the high level

of maturity and evolving to the partnership stage.

The company developed relationship with the

provider in the way that the former exhibits a

proactive behaviour suggesting improvements for

IT-related issues. In the ideal situation, the vendor

should provide feedback for business-related

matters. The level of internal alignment is lower than

in Company B; likely it could be explained by the

supply-demand nature of relationships between

business and IT. This style implies the directive

communication when IT responds to business’

requests without taking part in discussion of the

value of the project and whether it contributes to the

goals of the IT department itself. In Company A, the

IT department is focused on the routine functional

issues such as maintenance and support of the

existing services. The result is that the IT team loses

the broad perspective and does not contribute to the

continuous improvement of the whole organization.

Within Employee engagement dimension, the

mismatch can be seen in the fact that employees are

informed about business-IT strategies in a complete

and timely manner, even if they do not fully

understand it.

The results of Company C also are in line with

this tendency: it has less mature ITO and lower score

of BIA. In general, ITO is not managed

appropriately, all factors are ranked neutrally

meaning that no success is achieved in any of them.

More actions should be taken to align business and

IT as well. IT is perceived as the cost centre rather

than investment and profit centre. IT management

does not have impact on business strategic planning.

Communication style is formalized and directive.

The Employee engagement has the highest score out

of all the dimensions. It shows that employees are

committed to the company and associate their own

success with the company’s achievements. However,

based on the results of the interview, senior

management should deliver information about

occurring changes and customer satisfaction in an

unambiguous way. It is important for regular

employees to know that the clients are satisfied with

the quality of the services and products.

Company D has a high maturity of ITO, but the

alignment level is the lowest among the four

companies. The reasons were explained during the

interview. Locally only IT staffing and the document

collaboration cloud services are outsourced, while

other IT services are outsourced to the European

vendors and governed by European headquarter. The

company has a long history of ITO relationships,

consequently it has a proper experience of drafting a

contract and managing ITO activities. The company

ICEIS2015-17thInternationalConferenceonEnterpriseInformationSystems

defines quantifiable performance metrics and

formulates them in the form of service level

agreements. The accomplishment of these levels by

vendor is monitored in accordance with the contract.

The knowledge and expertise are shared with the

vendor, which can impact positively the relationship

factor. Partnership and communication are almost

absent which makes the process of achieving

alignment even harder. Employee engagement

alignment is assessed at the highest level. This

means that this company managed to build loyal and

solid relationships with the employees, and to

communicate strategic plans and goals to the lower

hierarchy level. Additionally, regular meetings of

employees to discuss trends and developments

should be encouraged. Diversity of educational

backgrounds and perspectives foster creativity and

result in new innovative ideas. Currently existing

information systems do not contribute to the

achievement of business goals. For instance, the

ERP system does not support execution of business

strategies while it should create a value through

providing information for timely decision making.

The management should better align capabilities and

functionality of existing information systems with

the purposes of their implementation.

Analysis of the data shows that companies with

more mature IT outsourcing activities have higher

alignment between business and IT. The scores

calculated from the questionnaires show consistency

with the interviews’ results. Taking into account the

explorative nature of the research and the limited

number of cases, the received data form the basis to

formulating one hypothesis about the effect of ITO

on BIA: ITO has, in principle, a positive impact on

the level of BIA.

It should be emphasized that these results should

be considered with care. The sample set of four

subjects is too small to draw statistically valid

conclusions. The goal was to formulate hypotheses

that can be further tested with the larger sample of

companies.

7 DISCUSSION AND FUTURE

WORK

The present research applied a case study method.

The results clearly demonstrate that this method

allows a comprehensive investigation of the

situation and understanding the essence of the

relationship between BIA and ITO. Interviews

revealed a great number of interesting points that

could not be captured only with the questionnaire

and literature review. From this point of view, the

interviews appear to be an invaluable source of

information.

The current research is a subject of several

limitations. The main limitation of the empirical

findings is the fact that a small sample has been

studied which limits the statistical generalizability of

the research. Another limitation is that the

questionnaire was sent to only one person in each

company, whereas responses from several people

could provide more objective picture and increase

the credibility and transparency of the research. The

realized limitation is that the Employee engagement

dimension was evaluated by the person of

managerial role. It would be more valuable, for

example, to gain insights of the regular employee.

The research work pursued allowed to outline

several recommendations for future research. Firstly,

further research should target more companies. The

survey method should be used, built on the revised

questionnaire.

Most certainly the companies that participated in

the current research study would like to investigate

the relative development of the alignment and see

whether they improve over time. The identical

research can be conducted over some period of time

in order to identify what actions give results or

which ones are not productive.

One of the goals of the empirical study was to

collect recommendations for a questionnaire

revision. The present research can be considered as a

preliminary investigation that exposed shortcomings

of the composed questionnaire. Being improved, the

questionnaire can serve as a foundation for a

scientifically based survey research.

As a direction for future research, the mechanism

of measuring ITO success should be further

extended by inclusion of additional factors. A

respondent proposed the inclusion of the Incident

management factor. In the case of the incident

occurrence the primary goal is to restore normal

service operation as quickly as possible and to

minimize the impact on business operations. For

this, direct contact with service vendor should be

established.

Issues related to BIA assessment in organizations

outsourcing IT resources will continue to influence

the design, management and planning of

organizations. As such, although an approach to

model BIA and ITO was advanced in this article,

further research on this topic will be pursued

following the above-mentioned research directions,

to extend the capabilities of the present model,

AnalysingBusiness-ITAlignmentintheITOutsourcingContext-ACaseStudyApproach

including validation by real industry cases. Future

work will also focus on analyzing the influence of

semantic technologies/ ontology based appraoches

on BIA in an ITO context, e.g., following the

approach proposed in (Veres, Sampson, Bleistein,

Cox and Verner, 2009) that would allow to map the

system requirements against strategic business

objectives. It is also intended to further test the

proposed model targeting other industry sectors.

8 CONCLUSIONS

In the line with the formulated objectives, the main

contribution of this research is the proposition of a

model which helps to gain a comprehensive

understanding of the influence of IT outsourcing

activities on the business-IT alignment maturity

level. We propose to measure the IT outsourcing

maturity through a set of factors that influence the

success of ITO activities. For measuring business-IT

alignment, Luftman’s model (2000) was extended

with two additional dimensions: Employee

engagement and Technology scope.

The proposed model was empirically evaluated

with four case studies. From the results of the

investigation it is possible to formulate the

hypothesis that IT outsourcing has, in principle, a

positive impact on the level of business-IT

alignment. However, this correlation most likely

depends on the situational characteristics such as:

industry sector, the size of the organization, role and

experience of respondent, etc. and should be

explored thoroughly. Therefore hypothesis should be

further verified with a larger sample of companies.

This research paper also contributes to creating the

basis for future research by building a theoretical

model and potential hypothesis to be tested with

repect to the interrelations between ITO and BIA.

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APPENDIX A

Company

1. In what industry does your company operate?

2. Could you describe the organizational structure?

3. If the company is transnational then who defines

IT policy? Centralized / decentralized?

Business-IT alignment

4. Is there a notion of business-IT alignment in the

company?

5. Is there a revision of actions for alignment

policy?

Communication

6. Do you have examples of communication

problems between business and IT (e.g.

escalation, situations, sharing of information)

Performance

7. Do you think that the company gets maximum

value from IT?

8. Do you use service level agreements?

Governance

9. How does the company choose the most valuable

IT investments?

Partnership

10. Does IT fulfil its role in achieving strategic

business goals?

Outsourcing

11. Does business processes / strategy of the vendor

impact strategy within the company?

12. Do you monitor and audit service provider’s

performance on a regular basis?

Model

13. Was it easy to apply the model? Too many

questions? Any recommendations to improve?

14. Do you think that maturity of ITO can be

identified through the derived factors?

AnalysingBusiness-ITAlignmentintheITOutsourcingContext-ACaseStudyApproach

Figure 3: Extract from on-line questionnaire.

ICEIS2015-17thInternationalConferenceonEnterpriseInformationSystems