PICMET 2007 Proceedings, 5-9 August, Portland, Oregon - USA 2007 PICMET

Business-IT Alignment Strategies: A Conceptual Modeling

Sujan Samanta
KaufmanHall & Associates, Inc., Skokie, IL, USA
which both core business and IT can look forward together
and strategically align the lateral distances. This necessitates
systematic interaction between business and IT leaders [17]
sharing a transparent value system in every strategic decision
making process and moving forward.
Another type of alignment is profile-matching. This has
been practiced mostly by merger and acquisition and
sometimes by selective capital investment towards a suborganization. It works by defining a best-fit organization
profile depending on the industry trend and then by searching
for the best matches. In this process, alignment is achieved at
the initial stage but the sensitivity of alignment gets lost
gradually over time. What was considered a strategic fit
between business and IT at one point of time is now out of
shape. Reasons may vary from different economy scale to
evolution of industry structure. An example of this would be
alignment effort in the communication provider industries
driven by convergence of data, voice and video. In recent few
years all the agility has been around not only how to trim out
the non-aligned functions but also how to follow the stream
of convergence to stay competitive. As one of the case
examples, the evolution process of how Ameritech became
AT&T touches these alignment points over a period of last
ten years. Basically the alignment is not a one-time event or
intermittent event; rather it is a continual process.
Business leaders often practice one other type of
alignment- leadership synergy. This is a process by which a
particular style of leadership becomes well accepted among
the employees. Eventually this form of alignment achieves
the expected strategic results with minimal cost and effort.
One example of this alignment would be the leadership effect
displayed by Ted Waitt of Gateway. Around year 2000 he
stepped out of the leadership position at a time when the
resource alignment towards organization strategy was in its
expected form. Within a year, it was evident that the new
leadership failed to preserve that alignment. Ted Waitt
returned to his firm as CEO to stop any further downgrade of
strategic operations and results. By integrating various
initiatives, attributes and cultural fitness drives at different
levels of the organization, business and IT alignment is
achieved magically [3]. Once a leader is gone out of the
organization, the alignment process is usually under the
mercy of the next leader.
By all means, a commonly understood, agreed and
sustainable framework does not exist among these alignment
approaches. Alignment over time has not been factored in any
of these approaches. A common framework is referred to as a
transparent value system which is usable continually by any
stakeholders of the business and IT alignment. This paper
suggests a transparent value system which would help an
organization see and evaluate itself from a strategic alignment
perspective over various phases of evolution of core business.

Abstract: Three commonly used business-IT alignment

strategies are parallelism, profile-matching and leadership
synergy. All these strategies provide alignment results for the
moment but do not provide a sustainable framework over a
period of time. As a result, business functions, especially IT
function, once aligned with the core business, lose the alignment
dynamics after a period of time. An alignment framework based
on organization's maturity time-scale and capital allocation
methodologies provides a premise on how business and IT can
be aligned strategically over time. A transparent value system
that allows business and IT assess the results of collaborative
actions acts as a measuring scale of the effectiveness of that
framework. The main theme of this paper is to propose a
strategy framework that can be utilized by core business and IT
function continually over the entire maturity life-cycle.

I. INTRODUCTION

Functional behavior of any alignment is to move an

object strategically with respect to another object to achieve a
combined and systematic result. Put into perspective, often
organization functions get carried away too far with their own
strength and alignment leading to a question - which function
should be aligned, with what, why, how and how much.
Often debates [18] on such topic lead to questions - should
IT be aligned with core business, should core business
understand and integrate IT better. In this paper, a concept of
business-IT alignment has been modeled to establish a
framework for the managers, strategy practitioners and
research professionals to think about a common premise of
sustenance. The scope of this paper is limited to alignment not integration. The core theme of this paper is considered a
variation to pioneering research work on business IT
alignment [5, 6, 7, 21, 22] but viewed from a day-to-day life
of professional sphere in recent years.
A basic type of alignment commonly used is parallelism.
This type of alignment is basically to keep the same distance
with respect to the primary line. This has been translated to a
percentage approach in majority of the traditional
organizations. Major parameters are counted in percent e.g.
contribution of IT as a percent of total sales or total
operations cost. By doing so, core business does not care
about where IT organization stands along the path and IT
organization just looks at the lateral distance and does not
look forward. Examples of such alignment practices are IT
operations in not-for-profit organizations and healthcare
service providers. If the size of patient care operations
increases, proportionate capital is poured into IT operation to
keep up the overall shape of the organization in tact. As a
result, the core business keeps on doing more of what it does
and the IT organization keeps on doing more of what it does.
The changes in scale of economy do not create any favorable
situation unless additional capital investment is made to make
it favorable. A premise has been proposed in this paper by

PICMET 2007 Proceedings, 5-9 August, Portland, Oregon - USA 2007 PICMET

II. CORE BUSINESS AND IT ORGANIZATION

commonly understood regime for the senior management to

think about pursuing the right questions and thereby deciding
a path of alignment without giving up the corridor of control.
The corridor of control [9] represents a balance between the
two neighboring functions. It should be transparent enough to
enable both business and IT to see each other and still take
charge in its own terms [23] and whenever necessary meet at
the fence.

Every organization more or less holds a clear definition

of its core business. This definition in some form has
excluded IT with a belief that IT does not generate revenue,
core business does. IT is seen as operational props to the core
business. The easy way out to deal with IT has been to
outsource it in parts or in totality, in many cases just to
allocate a fraction of capital and operating budgets annually.
This is valid at the growth stage but the problem is that once
core business has moved up in the maturity scale, the
outsourcing engagement is left out at a separate growth curve.
They grow in their own terms. As a result, the maturity level,
growth rate and strategic perspectives of these two
organizations do not get synchronized. Core business is
evaluated with the core business parameters. IT
organizational success is evaluated by IT parameters. The
meaning of business IT alignment has been translated and
implemented by the top executives by having more frequent
meetings between IT chiefs and other executives like CFO
and CEO. A few smart selling pitches brought in several
lingo e.g. ROI, to communicate the value of IT to the senior
management irrespective of the type of core business and
irrespective of what IT organization is up to. The agility of
the outsourcing trends took advantage of the detachment of
the two organizations - IT and core business. The advantage
of outsourcing is clear in terms of lower operational cost and
cash-rich bottom-line. Surveys of the chief executives and
case studies [2] from time to time show that something is still
missing. That is alignment of IT with the core business. At
this point, a few consulting firms went ahead and published
step by step guide on how to align IT with the core business.
Several research initiatives addressed the issue as well. At the
bottom line, did it work really for the practitioners? Not yet.
Why? There is no shared framework that can be used over
time. There is no commonly understood regime which would
provide a dynamic foundation for the alignment over time.
Dynamic foundation implies the foundation that would be
strategically adjusted over time. Alignment in its own term
requires that an object be strategically adjusted with respect
to changes in the primary object. These objects in IT function
have been usually some form of IT goals - not any form of
core business goals. One reason behind this problem is a
common understanding that apple should be compared with
apples and orange should be compared with oranges.
Alignment of IT with core business is somewhat a form of
comparison between apples and oranges as to find out how
well IT results should or will perform compared to the core
business goals [13].
What is an alignment? Why is it needed? How is it
defined in objective terms? How close or how far should the
aligned objectives be? Who is or are to judge the alignment?
What are the bottom line costs and advantages? Is alignment
a process or a culture? The list of questions goes on and on.
The challenge is how to pick what questions. A deeper
challenge is how to address those questions so that IT values
are leveraged by business values now and in future. In this
article, the proposed alignment framework will provide a

III. ALIGNMENT STRATEGIES

Every organization has its own parameters that are
considered vital for its core business. On the other hand the
parameters of IT evolved from a different regime. A decade
ago, an Oracle developer could easily change jobs between
different industries. Now the employers seek some form of
insight into the industry structure in addition to IT. Why so?
It is because employers are looking for already aligned
resources. One other subject in this context is succession
planning. Whenever core business is in need for a successor
to a departing leader, usually the leaders from operations,
marketing or other core functions are called on or someone
from outside the organization having similar capability is
called on. A technology leader within an organization has
been rarely called on to fill in the position of chief business
leadership role. This is natural because IT leadership is never
merged or aligned with the core operations strategies. On a
fore thinking note, should it be merged or aligned? The
answer is definitely yes. The last stop of an IT player ends up
at a CIO role and usually that's the end of the story. The
purpose of having a CIO role was to integrate strategic IT
values with core business values. The truth turned out not
exactly as expected. If a job at the core level has something to
do with IT, the ownership of this job goes to CIO and if it has
to do something with business strategy, the ownership goes to
someone else. Thus having a CIO role has actually sent core
business and IT in to different trajectories instead of bringing
them to a single trajectory. A well developed transparent
value system, if practiced rigorously, will eventually take IT
leadership to the core business leadership.
A common premise that should be utilized by business
and IT is the balance between capital alignment and the
maturity level of the business organization. Right about when
this paper was drafted, maturity based alignment was
proposed in published papers [19]. Maturity brings the time
component to the dynamics of alignment. In this paper
maturity scale has been utilized in combination with capital
allocation strategy. This approach provides both time
component and capital component. When timing of alignment
activities is right but the capital allocation strategy is not
right, the entire initiative of alignment fails. Maturity is
achieved within a scale of economy for every organization
and every function. Some functions mature fast and other
ones are never at their peak. The SEI sponsored Capability
Maturity Model has addressed the staged improvement of the
functions so that a strategic alignment level is achieved for
the IT functions with the core business [ 1]. Subsequently, it
included integration of business process into IT but still the

PICMET 2007 Proceedings, 5-9 August, Portland, Oregon - USA 2007 PICMET

common control points based on maturity, referred to as

'Strategy Cell' for discussion purpose, indicates the interfaces
on the corridor of control. These interfaces are the baselines
of alignment. When business and IT are aligned internally
with each other and externally with market and competition,
they work on the common strategy cell. If one side gets out of
aligned trajectory, the strategic alignment process must bring
both sides of the corridor on to the same strategy cell.
Infant stage is usually valid for the start-up, newly
formed or newly branched out organizations funded by
threshold capital. Mature stage pertains to the state of
economic balance that enables an organization to function
within its expected strategic course funded by strategic
capital. Ripe stage refers to the wearing out stage of the firm
often needing contingency capital. It refers to the state in
which if no action is taken within a certain time frame the
firm will cease to exist. Core business and IT may follow
maturity path independently but alignment will be achieved
only when excellence is achieved in the common areas that
are represented in each strategy cell. The number of strategy
cells can be expanded or detailed as per convenience of the
thought leaders and decision makers. The purpose of this
framework is to provide a time-based common premise.
When core business moves from one strategy cell to the next
strategy cell, the alignment focus must change to stay
competitive. If the focus is not changed accordingly, the
differences in interest of core business and IT lead them
towards different maturity path and ultimately making IT
organization an overhead instead of a leverage factor.

talk of the trade remained confined within IT. Process driven

maturity [10] focus provides process alignment internally but
still the true measurement of this alignment need to be
assessed from a neutral angle. Similar improvement charters
have been utilized for the core businesses in their respective
industries e.g. Sarbanes-Oxley 404 compliance. The way
capital is budgeted is not the same way capital is allocated.
Even though capital is budgeted for IT in a certain way to
achieve certain goals, the problem surfaces out of the process
by which capital is actually allocated and the way benefit
realized. There is a threshold level of capital which must be
allocated and invested to reach the next level which is
considered as strategy level. With the threshold capital
allocation, one should not expect a strategic return on IT. In
strategy level, capital is allocated strategically to achieve a
specific result. Strategic return can be expected only at this
stage. Because of the differences in control methodologies,
capital allocation and timing of the allocation, the pace of
maturity has been different in different functions within the
same organization.
Maturity levels are broadly spaced into three stages infant, mature and ripe. This dimension has been used as a
time-scale to develop intersections between business strategy
and IT strategy. Any organization may have same or different
maturity level(s) but the real alignment challenge is how to
leverage IT towards strategic development of core businesses
and how to reach a point beyond threshold when resources
can be moved strategically. In Figure 1, the proposed
'Alignment Framework' shows what a core business and IT
should work on together at any given stage of maturity. The

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PICMET 2007 Proceedings, 5-9 August, Portland, Oregon - USA 2007 PICMET

The main approach is the modular thinking behind the

alignment. This modular approach enables a coordinated
interaction along the corridor of control. The dynamics of
alignment can be visualized by mapping the actions along the
strategy cells on the corridor of control and deciding which
piece of action should go to which direction so that all the
actions are leveled with the same strategy cell. In order to
achieve this synchronization, business and IT should agree on
common expectations and common results. The actions inside
the corridor of control are categorized in top level groups. For
example, strategy cell 2 emphasizes on operations and
bottom-line profitability. Core business at mature stage
should think about adding technology enabled products and
services that result into additional streams of revenue with
minimal cost to the line of operations where IT organization
is also at its maturity [12].

overall results need to come to a consent structure with

simple and precise measure. Every alignment process
contains two levels of expectations - strategic and structural.
Strategic expectation is based on external and internal drivers
where as structural expectation is based on internal objectives
and alignment goals. Strategic actualization involves of
making the strategic action happen and structural
actualization involves of achieving the alignment goal.
An alignment effort is not complete unless the achieved
and perceived value is complete with the consent of business
and IT leadership. The values are not correct or adequate if
the measuring scale is not of higher resolution and finer
calibration. The calibration factor should be controlled by the
board of directors or some designated party which is neutral
or external to the business and IT functions. That way the
transparent value system will have a common and un-biased
ground of consent. Also this external focus provides a
customer centric view [4] which makes the alignment process
meaningful and faster for a customer driven business
strategy.

IV. TRANSPARENT VALUE SYSTEM

Utilization of the alignment framework leads to changes

that are visible to different stakeholders differently. It is
necessary to assess the changes and their impact continuously
[15]. More important is to assess those changes from a
common perspective. Performance measurement and
alignment process are direct factors of strategic achievement
[14]. As a shortcut, several firms have implemented practices
that evaluate the business value of the output generated by its
IT organization. A simple approach has been to have a
business leader lead the IT functions instead of just having
been a sponsor of the IT functions. This kind of effort takes
care of one way integration. It should be complemented by
including the technology component in core business
leadership as well. Even by doing so, a greater challenge is
how we would know whether the output of the IT function
will be strategically aligned over time. To address this
challenge, a transparent value system should be constructed
which incorporates the output of core business and IT on a
single dashboard. Alignment results need to be interpreted
into a form of representation on the dashboard so that both
core business and IT can evaluate the results and trace back
to the origin of any problem or success. If there is any
existing scorecard or index system in use, that can be utilized
as well [8]. At the end, a common consent needs to be
achieved on measurement mechanism. For example, an
organization which is at infant stage of its lifecycle and has a
mature IT function may decide as a part of alignment exercise
to launch a product in the market at a certain time with an
estimated lead time. In this case, the expected- value output
should show whether the product was in fact launched within
the expected lead time and at the expected time-frame. This
model does not depend on how core business or IT execute
its own strategy independently but depends on how well both
of them execute it together throughout the alignment process.
In that pursuit, the common behavioral and organizational
agility, attitude and intent must be synchronized to attain any
success criterion of the expected value proposition. The

V. WHOSE JOB IS IT ANYWAY?

Given that we know what it takes to align IT with core

business, ultimately whose job is it anyway? Ideally this
should be done by someone who could function as an
enzyme. An enzyme itself remains unchanged while it makes
the substrates change and achieves the intended results. This
implies that the alignment process should be carried out by
someone, internal or external, not affected by the alignment
results directly. How does this help? This approach
eliminates the bias or error of measuring self and puts both
core business and IT in a more absolute measuring scale. The
strategic change becomes synergic between core business and
IT with respect to overall value propositions of the firm. An
organization can align itself to a streamline but only someone
looking from a neutral angle can assess the dimensions of that
streamline. Since the organization strategies change very
quickly over time, an approach to execute the alignment
process is to start with a formal alignment process conducted
by a qualified authority internal or external to the firm and
then continuing the alignment audits internally until a major
change occurs in the scale of economy. The first step is very
similar to a traditional finance audit. Financial audits indicate
the financial health of an organization based on the current
assessment. An alignment audit indicates state of alignment
of the functional area with respect to organizational strategic
direction. This is in fact an audit of the organization structure
and strategies. At large this type of audit is not done formally
or if it is done it remains confined to a limited discussion in a
senior management or board meeting. A line of practices,
external or internal to the organization, providing such audit
services could achieve these alignment challenges. How is
the cost factor tied to it? Cost comes as a consideration point
while the capital allocation is still at threshold level. Once
that threshold level is achieved the strategic capital allocation

PICMET 2007 Proceedings, 5-9 August, Portland, Oregon - USA 2007 PICMET

[4]

process makes the cost factor less relevant. The focus

whether the alignment is measured by an external scale
makes the cost focus secondary in relation to the overall goal
of alignment process. The cost structure will evolve over the
time depending on complexity of the alignment but the
outcome of common audit practices such as financial audit,
compliance audit always outweigh the cost factor.

[7]

VI. WHERE DO WE GO FROM HERE?

[8]

[5]
[6]

The core message of this article is to re-think an area

which is considered to be out of date from a theoretical world
but is well in action in almost every organization in the
professional sphere [16, 20]. Collaborative research activities
in academia and business community have brought more
effective and efficient approaches to this streamline of
thought but the concept of alignment audit has not been
practiced formally. An initiative to have informal alignment
audits conducted internally may establish a starting point. In
that process this alignment framework will help the
organizations to build a bias-free outlook of the selfalignment errors. The evolution of IT function has been
differently from that of fundamental business functions.
Hence, the alignment of a fundamental function, like
marketing, sales or R&D, follows a different path from that
of IT function. Yet similar approach is tried when it comes to
the matter of IT alignment strategy. One way to break those
behavioral constraints is to utilize the enzyme approach
mentioned earlier which is basically an alignment audit
conducted like any other functional audit. Another
component that must go with the alignment audit is
adjustment in definition of the corridor of control. How much
control should core business have on IT and how much of
core business should be governed by IT and at what stage?
The strategy cells on the corridor of control provide a
strategic baseline for the business IT alignment and
subsequently provide a time based dynamic premise for both
to define the strategic actions in a proactive manner.

[21]

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[22]

[9]
[10]

[11]
[12]
[13]
[14]

[15]

[16]
[17]

[18]
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[20]

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