COMPETING PERSPECTIVES ON THE LINK BETWEEN STRATEGIC INFORMATION TECHNOLOGY ALIGNMENT AND ORGANIZATIONAL AGILITY: INSIGHTS FROM A MEDIATION

MODEL
Authors: Paul P. Tallon & Alain Pinsonneault

Prepared by: Group 6

INTRODUCTION

Strategic IT Alignment

Depicts the way in which a firm uses IT to achieve improved performance and competitiveness Alignment is the capacity to demonstrate a positive relationship between IT and financial measures of performance

Organizational Agility
Ability of a firm to rapidly change or adapt in response to changes in the market High degree of organizational agility can help a company to react successfully to the emergence of new competitors

CASE FACTS
The case aims at explaining a positive and significant link between alignment and agility and between agility and firm performance It also shows that: The effect of alignment on performance is fully mediated by agility Environmental volatility positively moderates the link between agility and firm performance Agility has a greater impact on firm performance in more volatile markets

CONCEPTUAL MODEL

Question 1

WHAT IS AGILITY?

AGILITY

The capability of a company to rapidly change or adapt in response to changes in the market. A high degree of organizational agility can help a company to react successfully to the emergence of new competitors, the development of new industrychanging technologies, or sudden shifts in overall market conditions. Agility has emerged as a key business factor

Question 2
EXPLAIN THE PARADOX - "KEEPING IT RESOURCES
IN CLOSE PROXIMITY TO ACTIVITIES THAT NEED TO CHANGE ALLOWS FOR RAPID RESPONSIVENESS TO CHANGE"

The pursuit of alignment requires IT to be deeply embedded in key business activities

Keeping IT resources in close proximity to activities that need to change allows for rapid responsiveness to change. So it essentially means that alignment between IT and business strategy is positively associated with agility.

Through alignment the entire process gets responsive to any changes and hence we can say that agility is improved

On the other hand, embedding IT into business activities can lead to extremely routine activities that hurt agility by limiting a firms strategic choices

So there is an attempt for a tradeoff between shortterm performance benefits from alignment and long term benefits from agility.

It essentially means alignment is beneficial more for short term while agility is useful more for long term.

Question 3

WHAT ARE THE TWO MODERATING FACTORS DISCUSSED IN THE CONCEPTUAL MODEL?

MODERATING FACTORS

IT flexibility positively moderates the link between alignment and agility

Environmental volatility positively moderates the relationship between agility and firm performance

IT FLEXIBILITY

Firms with similar levels of alignment between their IT and business strategy have different agility depending on their respective IT infrastructure flexibility.
IT flexibility can have two moderating effects
Further increase positive effect Decrease some of the negative effect

ENVIRONMENTAL VOLATILITY

Defined as the frequency and extent of change in critical market variables Link between agility and firm performance influenced by the rate of change in the environment. In a stable setting , less to gain from agility or less to lose from being slow to react.

Firm Performance

Environmental Turbulance Environmental Stability

Agility

Question 4

WHAT ARE THE PARALLEL NOTIONS OF REACH AND RICHNESS?

EFFECT OF IT FLEXIBILITY

IT flexibility can have two moderating effects

Further increase positive effect Decrease some of the negative effect

Two properties of flexible IT Infrastructure are

Scalability Adaptability

These are the parallel notions of reach & richness

SCALABILITY

Extent to which IT capacity can expand or contract Can be achieved in two ways:
Building or acquiring additional resources o using more recent technologies - grid computing
o

Scalability enhances the response of IT to changing competitive scenarios and helps achieve flexibility

ADAPTABILITY
Interoperability of data structures and Portability of applications to different OS Can be achieved in following way

Middleware that integrates data and allow information sharing

Adaptability makes system robust through sufficient information sharing and helps increase its applicability

Question 5

DOES THE RESULTS FROM THE PAPER SUPPORT THE CLAIM "ALIGNMENT ENABLES AGILITY"?

ALIGNMENT ENABLES AGILITY

Two Hypothesis:

H2a: Alignment between IT and business strategy

is positively associated with agility

H2b: Alignment between IT and business strategy

is negatively associated with agility H2A is supported and H2B is negated

Significance levels (Beta = 0.36, p<0.001) show that alignment is positively associated with performance only if it helps agility to contribute towards higher performance Through alignment the entire process gets accustomed to any changes and hence we can say that agility is improved and firm performance increases

Question 6

WHAT ARE THE MAIN OBSERVATIONS FROM EARLIER RESEARCH ON STRATEGIC IT ALIGNMENT?

EARLIER RESEARCH

First, majority were of the view that Alignment is positively associated with firm performance
This paper reveals that at the process level Alignment is positively correlated with IT Business value Also primary locus of alignment within the firm varies based on differences in strategic foci and so alignment is rarely the same in any two firms.

Second, significance of moderators has increased in respect to study of alignment

Research has found important differences in alignment based on the type of strategy adopted by firms

Common Question
Do you see a connect between Slaughter and Tallon's paper? Describe your view.

Slaughter Case

Proves that software processes should be aligned with the company strategy Proves positive link between strategic IT alignment and organizational agility

Tallon Case

Yes there is a connect between both the cases As agility is responsible for increased performance of firm Agility is positively correlated to IT alignment And alignment itself is supported by software processes Thus it all forms a chain and it is as strong as the weakest link