A FRAMEWORK FOR EFFECTIVE IT INVESTMENT
From the Perspective of Business – IT Alignment and Organization
Kayo Iizuka
School of Network and Information, Senshu University, Kanagawa, Japan
Shuhei Kudo, Michiko Miyamoto
Department of Management Science and Engineering, Akita Prefectural University, Akita, Japan
Keywords: Business process re-engineering (BPR), Business -IT alignment, Effective approach, Organizational factors.
Abstract: Although studies on the investment effect of information technology (IT) have been proceeding, the
requirements for effective IT investment are changing due to changes in the conditions and circumstances of
many companies, such as diversified organization types (e.g. types of relationship between IT section and
business planning section), and consideration of effectiveness of enterprise groups at the international level
etc. In this situation, a methodology for reinforcing the IT investment effectiveness of diversified companies
individually (not simply a standardized methodology) might be significant. In order to take up this challenge,
the authors propose a framework for effective IT investment from the perspective of business - IT alignment
and organization.
1 INTRODUCTION
Research into effective IT investment has been
proceeding for years, in line with business
requirements. As for the effectiveness of IT
investment and the effectiveness of BPR using IT,
there are works such as analyses of the relationship
between macro economic data on IT investment and
financial data, or evaluation methods of IT
investment. These works have contributed to
determining the importance of IT and provides
evaluation methods of IT investment effects. There
are works about the cost effectiveness of IT from the
perspective of IT project management. These studies
offer project management know-how and
methodologies for improving the effectiveness of IT.
Recently, there have been studies analysing the
relationship between leadership and the activities of
the chief information officer (CIO) and IT
effectiveness. These studies contribute to showing
the effective actions of CIO. From the point of view
of researchers and consultants, the authors have been
pursuing studies on these themes, such as the
methodology of business-process modelling, the
relationship between business and IT, and IT
effectiveness (including satisfaction). However, the
authors feel that a need for new methodologies for
improving IT effectiveness has arisen because the
business environment has changed. For example,
there are now more diversified organization types
(e.g. with a relationship between the IT section and
the business planning section), and consideration of
the effectiveness of enterprise groups at the
international level is important. Thus, traditional
uniform methodologies do not always work in these
situations. Under these conditions, the authors
propose a new framework for improving IT
effectiveness from the perspective of business-IT
alignment and organization. This framework will
suggest ways for effective IT use and effective
business process re-engineering (BPR) considering
the situation that companies currently face.
2 RELATED WORKS
Works related to the business effects of using IT or
IT implementation can be classified into certain
groups: analysis of success factors of IT
implementation, analysis of success factors of IT
management, and return on investment of IT. Based
on the BPR theory presented by Hammer and
344
Iizuka K., Kudo S. and Miyamoto M..
A FRAMEWORK FOR EFFECTIVE IT INVESTMENT - From the Perspective of Business – IT Alignment and Organization.
DOI: 10.5220/0003592303440349
In Proceedings of the 13th International Conference on Enterprise Information Systems (ICEIS-2011), pages 344-349
ISBN: 978-989-8425-55-3
Copyright
c
 2011 SCITEPRESS (Science and Technology Publications, Lda.)

Business Strategy
Business
Sco
p
e
Distinctive
Com
p
etencies
Business
Governance
IT Strategy
Technology
Sco
p
e
Systemic
Com
p
etencies
IT
Governance
Organizational Infrastructure
Administrative
Infrastructure
Processes Skills
IT Infrastructure
IT
Architecture
IT
Processes
IT
Skills
Automation Linkage Strategic Fit
Functional
Integration
External
Internal
Business IT
Figure 1: Strategic Alignment Model (Henderson and Venkatraman, 1993).
Champy, researchers have conducted studies from
various perspectives (Hammer and Champy 1993).
Grover et al. focused on the implementation problem
(1995), Earl et al. analyzed the relationship between
BPR and strategic planning (1995), and Attaran
explored the relationship between IT and BPR in
regard to capabilities and barriers to effective
implementation (2004). Taguchi, Iizuka et al.
analyzed the success factors of IT management,
especially for ERP systems (2007). Kadono and
Tsubaki focused on the mechanism of how IT
creates business value, particularly from the
viewpoint of IT management (2006). Chikara and
Takahashi attempted to adapt the customer
satisfaction method to the information system as part
of the information system audit measurement (1997).
However, these works do not thoroughly focus on
the relationship of organizations or the differences in
the satisfaction structure of organizational sections.
Moreover, there are additional issues that have come
to light recently, e.g., the balance of efficiency and
internal control (including information security
management), and organization reform or enterprise
integration, including the causes of recent economic
circumstances. In order to address these issues, the
authors have endeavoured to conduct research to
clarify the mechanism for achieving BPR
effectiveness.
As for business-IT alignment research,
Henderson and Venkatraman proposed the
realization of business-IT alignment by balancing
four areas (1989): business strategy, IT strategy,
organization platform, and IT platform, using the
strategic alignment model (SAM). External and
internal factors of both business and IT strategy
must fit (have “strategic fit”), and functions of
business and IT must be integrated in order to
balance the four areas (Figure 1). Sabherwal et al.
improved the strategic formation system
management profile model, which is similar to SAM
(2001). Tangible type was defined for each of the
four areas (business strategy, information system
strategy, business structure, information system
structure). These studies are significant in that they
focus on IT effectiveness from the management
viewpoint as well as the technical viewpoint.
However, the success factor of IT implementation
differs according to the circumstances or profile of
each company (e.g. organization structure types,
management type, etc). Therefore, IT management
frameworks that consider the types of companies
will be more effective. The authors propose
frameworks for effective IT implementation by
ensuring consistent alignment of business and IT
considering the situations and constraint conditions
of companies, and categorizing those conditions.
This framework focuses on both the method of
ensuring consistent alignment and the project
management of BPR.
3 BITA-BPR MODEL
3.1 Requirement for Effective IT
Investment Model
Considering the situations and problems that
companies are currently facing, as mentioned in the
previous chapters, there is a need for effective IT
investment. A possible new framework could have
the following features:
A FRAMEWORK FOR EFFECTIVE IT INVESTMENT - From the Perspective of Business - IT Alignment and
Organization
345

Integration
Value Discipline
・Operational Excellence
・Product Leader
・Customer Intimacy
Differenti-
ation
Strategy
Val ue-
added
Strategy
Cost
Strategy
Product
Innovation
Type
Customer
Relation
Type
Infrastruct-
ure Type
Internal
Information
Type
Market
Information
Type
Operational
Processing
Type
Trans-
formation
Strategy
Effecti-
veness
Strategy
Efficiency
Strategy
Fusion
Fit Fit
DrivenDriven
Driven Driven
Operation System
Business Strategy IT Strategy
Information System
Figure 2: Business – IT Alignment (BITA) Model.
• Possibility of working out the relationship
between degree of “business - IT alignment”
and “IT effectiveness”.
• Possibility of working out how to improve IT
effectiveness in the most effective way,
considering the situations and circumstances of
the companies.
¾ e.g. Organization types (relationship
between business planning section and IT
section, IT service subsidiary company
types).
¾ Not guiding in only one particular
direction, but showing alternatives for
improving in ways that fit to each
situations precedent and constraint
conditions.
• Consideration of effective IT investment at a
global level.
¾ This is because globalization of
companies is progressing and many
companies are considering effective IT
investment and its use at global levels.
¾ Considering global IT implementation,
cultural factors are important. There has
been research on cultural differences in
using IT in some categories, e.g.
groupware (Suadamara et al. 2010).
In order to meet these requirements, the authors
propose a new framework, the BITA-BPR model.
This framework is based on two models formally
designed by the authors: the Business- IT alignment
(BITA) model (Kudo and Yasuda 2010) and a two-
dimensional alignment enterprise modeling
framework named as the Collaborative Enterprise
Model (CEM) (Iizuka and Matsumoto 1999). These
models are described in the following sections.
3.2 BITA Model
Business-IT alignment (BITA) model is a value
discipline-driven strategic alignment model (Kudo
and Yasuda 2010). The value discipline concept
suggested by Treacy and Wiersema (1995) is built
into this framework. The value discipline pursued by
a company determines the alignment between
business and IT. “Strategic” alignment means the
goal of alignment is to gain a competitive advantage.
“Business process superiority,” “product
superiority” and “customer intimacy” are defined as
“value disciplines” of this model (Figure 2).
“Business process superiority” is extracted and
modified for a new framework proposed in this
paper.
3.3 CEM
Collaborative Enterprise Model (CEM) is designed
for ensuring consistent alignment of business and
information systems, “model (including platform)”
and “instance (business and IT operation of real
world” (Figure 3). This model is a two-dimensional,
alignment enterprise model. In the scheme of this
model:
• From the definition of CEM (Iizuka and
Matsumoto 1999), ‘Enterprise business (in the
real world) would be reflected by “model”,
because enterprise (in the real world) is a
“instance” of model’, we can evaluate enterprise
(in the real world) by evaluating the enterprise
“model”, which is a meta level of enterprise.
• From the definition of CEM, ‘Enterprise
“model” would be reflected by “meta model”,
because the enterprise model is an instance of
the meta model’, we can evaluate the enterprise
“model” by evaluating the “meta model
(reference model, etc.)”. One of the most
important and characteristic aspects of the
framework which can be seen in this paper is
that it uses two dimensions: “instantiation” and
“resolutions”. As was described in Figure 1, the
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Resolution- (Dimension 2)
Meta Model
Model
Instance
S2:
(Strategy)
B2:
Business
Process
I2:
Information
System
S1:
Strategy
B1:
Business
Process
I1:
Information
System
S0:
Strategy
B0:
Business
Process
I0:
Information
System
Instantiation-
(Dimension 1)
Reference
Model etc.
Model by
companies
(To-be model)
(Business
transaction of
real world）
Modeling
Implementation
Function code Function
XXXXX ○○○
Function related to
business process
Company group
model
Figure 3: Two-Dimensional Alignment Enterprise Modelling -Collaborative Enterprise Model (CEM ).
“meta model”, “model”, and “instance” are
defined, and the relationship of the “model” to
“instance” and from the “meta model” to
“model” is called instantiation. The “meta
model” is a kind of reference model, but there
are templates for business process, objects for
an information system that is categorized by
keys (industry etc.). “Model” is an enterprise -
specific model. “Instance” is the real world of
enterprise. “Strategy”, “business process”,
“information system” within the same level of
either “meta model”, “model”, and “instance”,
exist. In addition, in this paper, their
relationships are defined as resolution.
3.4 BITA-BPR Model
The BITA-BPR model is a framework intended to:
• Realize an effective business and information
system, by taking alignment of business and IT,
and improving the effect of IT investment.
• Realize an effective business re-engineering
(BPR) process by showing effective ways of
considering the specific situations or
circumstances of each company.
The BITA-BPR model is a model that is based on
business superiority disciplines extracted from the
BITA model, with the addition of CEM dimensions
of re-engineering tasks. Also, the authors add a
method that offers various alternatives that consider
situations and constraint conditions. In order to
confirm the availability of these alternative elements,
the authors are conducting surveys. Some of the
survey results are described in the next chapter.
4 FROM PRE-SURVEY RESULTS
4.1 Organization Structure and BPR
Task
Research on the BPR effectiveness of the IT
implementation or operation includes: analysis of
success factors of IT implementation, those of IT
management, and return on investment of IT.
Therefore, the authors analyzed the difference in
effectiveness caused by these organization type
differences.
Relationships between the IT and business planning
sections of companies have diversified over the last
few years. This change can be considered as arising
from a change in the role of IT: from just a tool of
for saving man-hours to the tool that supports the
strategy of management. Concretely, the IT section
that is an independent organization is enumerated so
far and it is enumerated that enterprises with a strong
connection to the BP section and the organization
have appeared. Under this change, the difference can
be seen in the effects of business reform by the
difference in the relationship between the IT section
and the business planning section. Figure 4 shows
the result of the analysis of the relationship between
setting metrics (“Setting numerical target of BPR?”)
A FRAMEWORK FOR EFFECTIVE IT INVESTMENT - From the Perspective of Business - IT Alignment and
Organization
347

BPREffectivenessbyOrganizationType(R elationshipbetweenBPsectionandITsection)
2
2
12
3
15
1
1
5
13
1
131
0% 20% 40% 60% 80% 100%
（
4
）
others
（
3
）
ITsection is located
under BP section
（
2
）
belonging to the same
higher level organization
（
1
）
independent relations
Setting of numerical targets-y es,
Effective Result-y es
Setting of numerical targets-y es,
Effective Result-no
Setting of numerical targets-no,
Effective Result-y es
Setting of numerical targets-no,
Effective Result-no
n/a
Others
Figure 4: BPR Effectiveness by Organization Type (SEC-BPR).
BPR Effectiveness by Onganization Type(Relationship between BP section and IT section)
2
2
12
1
1
5
13
3
15
1
131
0% 20% 40% 60% 80% 100%
（
4
）
others
（
3
）
ITsection is located
under BPsection
（
2
）
belonging to the same
higher level organization
（
1
）
independent relations
Setting of numerical targets-yes,
Effective Result-y es
Setting of numerical targets-no,
Effective Result-y es
Setting of numerical targets-yes,
Effective Result-no
Setting of numerical targets-no,
Effective Result-no
n/a
Others
Figure 5: BPR Effectiveness by Organization Type (SEC-BPR)[Sort order changed].
and BPR effects (“Had effective BPR result?”).
These questions were only asked of firms that
answered “BPR status is now implemented”. By
organization pattern (1) IT section and BP section
have an independent relationship, (2) the IT section
and BP section belong to the same higher level
organization, and (3) the IT section is located under
the BP section. The ratio of the firms that answered
“Setting of numerical targets-yes” was high for the
groups of firms that answered that the IT section and
BP section had an independent relationship (Figure
4). However, the ratio of the firms that answered
“effective result-yes” was high for the firms that
answered that the IT section and BP section
belonged to the same organization (Figure 5), and in
this organization pattern, “setting of numerical
targets-no, effective result-yes” was much more
prevalent than other organization patterns. The
reason for this fact is that the organization
infrastructure compensates by setting specific
numerical targets. In other words, setting numerical
targets may enable compensation of an organization
of communication infrastructure in some way. As
communication infrastructure, a balanced scorecard
(BSC) is also effective. The firms that answered
“BSC implemented” have a greater tendency to
achieve BPR effectiveness than firms that answered
“BSC not implemented”. Other findings from the
pre-survey results are (from statistical analysis):
• The relationship between the business planning
section and IT section affect BPR.
• Even if the business planning section and the IT
section are not close in the organizational
structure of the company, it is possible to
improve the BPR effect by setting numerical
targets.
• The inter-organization communication level
affects BPR effects.
• The degree of commitment of top management
of BPR is related to the setting of numerical
targets.
• The degree of commitment of top management
of BPR is related to the setting of numerical
targets.
• Even if numerical targets are set, it is difficult
make effective without the commitment of top
management.
5 CONCLUSIONS AND FUTURE
RESEARCH
The goal of this paper is to present (i) a new
framework for effective IT investment, and (ii) the
first version of a model to assess business-IT
alignment in the Collaborative Enterprise Model
(CEM); this is called the BITA-BPR model. Based
on an analysis of the potential applicability of
several theories and models in the area of business-
IT alignment, we present a new model, the BITA-
BPR model, which is based on business superiority
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348

disciplines extracted from the BITA model
combined with CEM dimensions of re-engineering
tasks. Then the authors have added methods that
offer alternatives according to situations and
constraint conditions for BPR. This framework will
suggest the effective use of IT, as well as the most
effective BPR implementation process, considering
the situation that companies currently face. To
achieve this purpose, the survey that the authors are
planning will cover the organizational sections of IT,
business planning, and end-users. Businesses will
get more value from IT by considering their
operational and strategic business needs. There are
several approaches that can be taken to align IT with
business. Some approaches focus on the roles of
individual IT contributors, while others focus on the
needs of the business side and their position in the
market. The authors will conduct a survey to clarify
if by using BITA-BPR, the IT department can
deliver the right support to various business
divisions to meet their strategic goals. The analysis
results from this research will contribute to effective
BPR by showing feasible options for companies.
ACKNOWLEDGEMENTS
This work was supported in part by a Grant-in-Aid
for Scientific Research (18810030). Also, we really
appreciate the firms who cooperated in the
questionnaire and interviews.
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