An Update on Business-IT Alignment: "A Line" Has Been Drawn
Jerry Luftman, Rajkumar Kempaiah
For almost three decades, practitioners, academics, consultants, and research organizations have identified “attaining alignment between IT and business” as a pervasive problem. Is it as difficult as drawing “a line in the sand”? Although we have seen improvement, there are reasons why alignment is a persistent issue—as will be discussed. Our research has found that no alignment silver bullet exists. Rather, alignment involves interrelated capabilities that can be gauged by measuring six components: communications, value, governance, partnership, scope and architecture, and skills. These six components can then be placed in a five-level maturity model, where Level 5 is the highest maturity. From measuring these six components in 197 mainly Global 1,000 organizations in the United States, Latin America, Europe, and India, we found that most organizations today are at Level 3. Our research, and others’ research, has also found positive correlations between the maturity of IT-business alignment and (1) IT’s organizational structure, (2) the CIO’s reporting structure and (3) firm performance. Federated IT structures are associated with higher alignment maturity than centralized or decentralized structures. Companies with CIOs reporting directly to the CEO, president, or chairman have significantly higher alignment maturity than those where the CIO reports to a business unit executive, the COO, or the CFO. And higher alignment maturity correlates with higher firm performance.
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