Understanding the Role of Business – IT Alignment in
Organisational Agility
Charles Crick and Eng Chew
Faculty of Engineering and Information Technology, University of Technology, Sydney, Australia
Keywords: Business-IT Alignment, Socio-technical Systems, Organisational Agility.
Abstract: Extant research shows business-IT alignment to be both an enabler and inhibitor of overall organisational
agility and has pointed to the need for finer grained perspectives to fully elucidate the relationship. This
paper posits the view that, firstly, current approaches to reasoning about where rigidities are present that are
preventing organisational agility are lacking in both granularity and sound ontology. Secondly, that in order
to obtain the necessary granular view, the socio-technical dimension of the business-IT relationship must be
examined. An initial conceptual model behind ongoing research into this topical problem area is presented.
1 INTRODUCTION
Modern organisations are more reliant on IT than
ever. In the modern, dynamic business environment
much is made of the need for organisational agility
and the role IT plays as a contributor to this attribute
(e.g. Sambamurthy, Bharadwaj and Grover 2003;
Zammuto et al., 2007; Weerdt et al., 2012).
However, modern organisations are also faced with
an ever burgeoning IT applications portfolio, both in
size and complexity (Rettig 2007). This intrinsically
creates problems for organisational agility as there is
an increasing need to respond to environmental
change and at the same time redeploy (or deploy
new) IT functionality from the existing complex IT
applications portfolio. In doing this, organisations
are faced with not only technical challenges
involving application architecture, but also socio-
technical issues that go to the heart of how
technology is used operationally in organisational
processes to deliver the new or changed capability.
How easy or otherwise it is for the organisation to
make changes across these “layers” is a significant
research problem.
There is a significant quantity of research that
substantiates the idea that IT produces value for the
organisation (Melville et al., 2004; Avison et al.,
2004; Wang et al., 2012), and that, in particular, the
strategic alignment of IT produces business value
(Oh and Pinsonneault 2007; Tallon 2007).
The relationship between IT alignment and
organisational agility is not so clear cut however.
Researchers have made the case, on the one hand,
for IT alignment enhancing organisational agility
(e.g. Sambamurthy et al., 2003) as well, on the other
hand, impeding it (e.g. Rettig 2007). This has been
called the “alignment paradox” (Tallon 2003).
Whereas extant research has established empirical
evidence that goes some of the way to identifying
the circumstances giving rise to each perspective
(e.g. Lu and Ramamurthy 2011; Tallon and
Pinsonneault 2011), it is short on elucidating the
mechanisms involved that would better inform both
business and IT strategic decision making.
As Tallon puts it: “The critical alignment lesson
for companies is this: Increased strategic alignment
will improve IT's value to the business, but only if
the company is wired flexibly enough to react to
sudden business change” (2003, p.2).
So the question we ask is how we can better
understand this “organisational wiring”, especially
as it relates to IT: what are the contingencies that
determine the ability of the organisation to adapt to
business change?
We suggest that there are four key ingredients
that need to be integrated to provide an adequate
reasoning model for understanding business-IT
alignment, and that so far, existing research has
fallen short of bringing all of these elements
together. The elements are:
Organisational Dynamics. Understanding how
organisations respond to change.
459
Crick C. and Chew E..
Understanding the Role of Business – IT Alignment in Organisational Agility.
DOI: 10.5220/0004954404590464
In Proceedings of the 16th International Conference on Enterprise Information Systems (ICEIS-2014), pages 459-464
ISBN: 978-989-758-029-1
Copyright
c
2014 SCITEPRESS (Science and Technology Publications, Lda.)
Granularity. Understanding organisational
components at a fine grained level in order to
be able to reason about the mechanisms by
which IT influences the organisation’s agility.
The socio-technical dimension. Understanding
the technology-in-use within the organisation.
Ontology. Disambiguating a minefield of
multi-disciplinary terminology.
We posit that a more granular conceptual model of
the organisation’s business–IT landscape is required
to understand “what is really going on” when we
talk about alignment of IT to business and how this
enables or inhibits the agility of the organisation.
This paper explores these four areas in more detail
and then goes on to outline current research towards
a new theoretical model that seeks to integrate them.
2 ORGANISATIONAL DYNAMICS
Prompted by need to understand the role of the
organisation and its relationship to this dynamic
business environment, research in the management
and organisational sciences have, over the last
decade or so, developed ideas such as dynamic
capabilities (Teece et al., 1997; Teece 2007; Teece
2012), organisational routines (Pentland and
Feldman 2005; Pentland et al., 2012) and
evolutionary theories of the organisation (Volberda
and Lewin 2003; Rivkin and Siggelkow 2007;
McKelvey 1999) among others. These theories have
identified the need for organisational agility, and
have looked at how organisations achieve this.
The incorporation of this dynamic element into
the business-IT alignment literature has, however,
been mixed, showing some evolution since this
research area was as initially formalised in 1980’s,
but still falling short of satisfactorily
accommodating the need for change as a natural
state. Earlier viewpoints tended to model, for
example, the structural alignments between IT and
business (Ein-Dor and Segev 1982); or the more
complex structural and strategic relationships as in
the Strategic Alignment Model (SAM) (Henderson
and Venkatraman 1993), but in a relatively static
way that made the assumption that once set, a
particular alignment perspective could be regarded
as fixed. Notwithstanding attempts to add a more
dynamic element, such as in the punctuated
equilibrium model (Sabherwal et al., 2001), the
SAM has been criticised for being too deterministic
and lacking a perspective on how the business-IT
relationship co-evolves over time (Peppard and Breu
2003).
In a departure from the previous orthodoxy, co-
evolutionary models of the business–IT relationship
have emerged (Benbya and McKelvey 2006; Merali
and McKelvey 2006) These approaches, based on
adaptive systems theory, promise to shed a new light
not only on the dynamics of the organisation, but
also on the role played by complexity (e.g. of the
inter-relationships).
3 GRANULARITY
“What looks from a distance like no change masks
more granular change close up” (Helfat and Winter
2011, p.1246).
Research in the organisational and management
sciences have analysed organisations in terms of
several types of granular elements, such as routines,
capabilities, roles, services and competencies.
Notwithstanding the ontological difficulties that
have arisen (discussed separately below), these have
served to add a fine grained understanding to our
knowledge of how organisations actually work.
Research has, however, been notably short on
elucidating the mechanisms involved such that one
may reason about causes and effects. The classic
positivist empirical research approach that tends to
equate causality to statistical correlation, provides
little insight into mechanism.
In addition, studies that have found empirical
relationships between business and IT concepts (e.g.
Reich and Benbasat 2000; Wang et al., 2012; Chan
et al., 2006), have tended to be coarse grained –
often at the firm level. There is a lack of finer
grained models which would explain mechanisms of
business–IT alignment in more detail and thereby
assist in identifying where the rigidities lie and
under what conditions.
In order to provide an adequate basis for
reasoning about the relationships between alignment
and agility, we therefore suggest there is a need for a
fine grained view of the appropriate organisational
elements in which relationships can be interpreted in
terms of mechanisms that underpin the behaviour.
One organisational perspective that is attractive
is proposed by Helfat et al. (2007), which uses the
idea of “capabilities” (a granular organisational
element), representing what the organisation does to
earn its living. Capabilities are measured in terms of
both evolutionary fitness and technical fitness,
where the former is the viewpoint exogenous to the
organisation and the latter is endogenous. This
presents a way to link the external environmental
pressure for organisations to adapt and be agile with
internal pressures demanding increasing efficiency
ICEIS2014-16thInternationalConferenceonEnterpriseInformationSystems
460
and effectiveness. By conceptualising technology as
one of the building blocks of organisational
capability, there is a foundation for a granular
business-IT model. This offers the potential for
reasoning about the role of IT at the organisational
capability level, and thence its role in any adaptation
of that capability, whether exogenously or
endogenously induced.
4 SOCIO-TECHNICAL
DIMENSION
Researchers have approached the issue of
conceptualising the human behavioural element of
organisations and its interaction with technology
across a spectrum of positivist, interpretivist and
critical realist perspectives. This is underscored by
the “clash” of the modernist and post modernist
world views evident in this multi-disciplinary
research field. It is a given that any item of research
carries with it a philosophical position whether
explicitly stated or not.
The inadequacy of the research to date in
incorporating technology into the study of the
organisation has been noted (Pentland 2013;
Orlikowski and Scott 2008; Volkoff, Strong and
Elmes 2007). Even within the organisational
sciences, theoretical developments in this area have
variously placed human intentionality at the centre
and ignored technology as with structuration theory
(Giddens 1984); regarded the human and technology
agencies as an inseparable duality, as with Actor-
Network theory (Latour 1987) or sociomateriality
(Orlikowski and Scott 2008); or looked at
technology as a material agency that plays a role in
moderating the relationship between the
performative and ostensive aspects of organisational
routines (Volkoff et al., 2007). A common theme
that arises is viewing social and technology elements
in relational terms where behaviours are emergent
from the interaction. This could be summarised as
the technology-in-practice viewpoint (Feldman and
Orlikowski 2011). This can be contrasted with the
more orthodox IS perspective where roles,
processes, technologies are characterised as stable,
independent entities with simple unidirectional
relationships (e.g. Tallon and Pinsonneault, 2011;
Melville et al., 2004; Henderson and Venkatraman,
1993).
The relational perspective is exemplified by the
emerging area of technology affordances (Zammuto
et al., 2007; Majchrzak and Markus, 2012; Leonardi
2011; Yoo and Boland, 2012). An affordance
represents the perception of what can be done with
an item of technology by a user with a particular
goal – i.e. the potentiality of a technology feature.
According to Leonardi (2011), the flexibility of
organisational routines as well as technologies will
determine how the affordance will be realised by
virtue of the way the human and material agencies
become “imbricated” or intertwined. In other words,
the affordance (or constraint) posed by an item of
technology may prompt a change to either the
routine or the technology depending on its flexibility
and on what has happened in the past. This is a
useful concept that extends the idea of the
performative routine (Feldman and Pentland 2003)
into the business-IT space.
We believe this not only offers an important new
perspective on the role of IT in organisations, but
that it also offers a naturally granular way of
conceiving of the business-IT relationship. What
remains is to examine how these granular
interactions play in the wider context of the
organisation’s agility.
5 ONTOLOGY
This problem domain is remarkable, not least
because of the plurality of theories that have been
developed across the intersecting disciplines
involved. These theories have invoked various units
of analysis as a means of decomposing the
organisation and understanding the concepts relevant
to the specific objectives of the researchers. Over
time some “generally understood” common
definitions have emerged that have allowed strands
of research to cross-fertilise and propagate.
Similarly, however, inconsistency and confusion
have also arisen in some of the concepts and
terminology. If we set aside the philosophical
differences mentioned previously, there are still
some difficulties with getting to a consistency of
usage and meaning with some basic terminology.
The observation made by Dosi et al. is
illustrative: “The term ‘capabilities’ floats in the
literature like an iceberg in a foggy Arctic sea, one
iceberg among many, not easily recognized as
different from several icebergs nearby” (2000, p.3).
This could equally apply to the “routines”. In fact
capability and routine are the terms most frequently
used in the organisational sciences to describe what
it is the organisation does and how it does it,
including how it uses IT. It is therefore important in
the context of understanding this problem domain,
which implicitly attempts to connect the two, that
UnderstandingtheRoleofBusiness-ITAlignmentinOrganisationalAgility
461
there is a firm definitional foundation for them.
Despite the progress in the development of the
ontology of the routine (e.g. Feldman and Pentland
2003; Pentland and Feldman 2005; Leonardi 2011),
there is still a schism with the IS world where the
term is scarcely used and it is more common to talk
about “business processes” (e.g. Hammer and
Champy 1993; Weske 2012; Trkman 2010).
Disambiguating this area by explicating the
interrelationships of these seemingly disparate but
related terms is a worthwhile objective in its own
right.
6 TOWARDS A NEW
FRAMEWORK
In our research, we seek to develop a new theoretical
framework for understanding business–IT alignment
and organisational agility. In attempting to address
the issues discussed, we posit the high level
conceptual model depicted in Figure 1. Underlying
the model are the concepts of evolutionary and
technical fitness of capabilities, inspired by Helfat et
al., (2007).
There are two types of coevolutionary
landscapes represented in Figure 1. The first
(evolutionary fitness) is participated in by
organisations and represents, for example,
competition in a marketplace. Here there are
ecosystems of two or more organisations where
evolutionary selection is based on capability within
a given ecosystem. This concept provides the first
level of granularity to describe the organisation. The
organisation’s ability to deploy a capability will
determine its “fitness” (i.e. competitive advantage)
in this external landscape.
Figure 1: Framework Conceptual Model.
The other (technical) fitness landscape is internal to
the organisation and represents the same
organisational capabilities in a coevolutionary
relationship with the information technology
systems that enable them.
Thus, we have the exogenous market force (or
another organisation) creating selection pressure on
a capability and at the same time the endogenous
landscape says how well we can support it or indeed
how quickly it can be pushed to the background in
the favour of another capability – thereby capturing
essence of the organisation’s agility. The
interlinking of both internal and external landscapes
captures the tension that exists between the two.
Casting these two fitness concepts into a systems-
theoretic context creates the opportunity for
applying a complex adaptive systems treatment to
how they adapt and evolve in a situation where there
are potentially conflicting fitness goals.
We note at this stage the simplification we have
made in figuring the exogenous landscape as a
purely competitive one. There are obviously
different types of organisation (such as customers,
suppliers or regulatory bodies) which are not in this
type of relationship with the organisation of focus.
As our research progresses we expect to establish
the scope of applicability of our model across these
organisation types.
Given this high level model, there is then the
opportunity to decompose the building blocks of
capabilities to further identify the locus of
inflexibility in the business-IT coevolutionary
relationship. Here the theory of organisational
routines is attractive, especially incorporating recent
developments of technology affordances and
imbrications (Zammuto et al., 2007; Leonardi, 2011)
as they naturally seek to address the socio-technical
relationship and also fit an evolutionary paradigm
(Pentland et al. 2012). Our ongoing research is
exploring this further.
7 CONCLUSION AND FURTHER
RESEARCH
Understanding the role of IT within the modern
organisation is highly topical and has been the
subject of much research across multiple disciplines.
We have identified four areas of deficiency in the
extant research that in our view need to be addressed
if we are to satisfactorily develop an integrative
theory that assists our understanding business-IT
alignment and its relationship to organisational
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agility.
Firstly, we must build dynamics into the heart of
the model: we suggest an adaptive systems
perspective. Secondly we must adopt a more
granular view, seeking to analyse the organisation at
a fine enough grain to reveal circumstances and
mechanisms that contribute to or inhibit agility.
Thirdly, we must understand the technology-in-
practice as against the technology-as-designed.
Lastly, any attempt at theorising in this domain must
be aware of the plurality of philosophical positions
that exist and carefully design their ontology
accordingly.
We believe an approach that addresses these
elements would provide a new insight into the
mechanisms at play within the organisation that
determine the contingent conditions for
organisational agility, especially as they relate to the
role of IT alignment.
In particular, the dual aspects of technical and
evolutionary fitness of capabilities (Helfat et al.
2007) allows the need for agility (evolutionary
fitness) to be related to the need for IT enablement
(technical fitness). Thus the idea of “IT alignment”
must serve both aspects if a capability is to remain
relevant and produce value for the organisation.
Our ongoing research in this area is following a
design science paradigm. We are seeking to define a
research-based theoretical framework and then
evaluate it using empirical data drawn from a variety
of case study organisations.
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