Volume 1 Article 11

March 1999

ENABLERS AND INHIBITORS OF

BUSINESS-IT ALIGNMENT

Jerry N. Luftman
School of Management, Stevens Institute of Technology
[email protected]
Raymond Papp
Department of MIS, Central Connecticut State University
[email protected]
Tom Brier
IBM Advanced Institute,
[email protected]

STRATEGY

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 ENABLERS AND INHIBITORS OF
BUSINESS-IT ALIGNMENT

Jerry N. Luftman
School of Management, Stevens Institute of Technology
[email protected]
Raymond Papp
Department of MIS, Central Connecticut State University
[email protected]
Tom Brier
IBM Advanced Institute,
[email protected]

ABSTRACT
This paper provides insight into identifying areas that help or hinder
business-IT alignment. Alignment focuses on the activities that management
performs to achieve cohesive goals across the organization. The aim of this
paper is to determine the most important enablers and inhibitors to alignment.
The paper presents and analyzes the results of a multi-year study of
strategic alignment. Data were obtained from business and information
technology executives from over 500 firms representing 15 industries who
attended classes addressing alignment at IBM’s Advanced Business Institute.
The executives were asked to describe those activities that assist in achieving
alignment and those which seem to hinder it. These enablers and inhibitors to
alignment were then analyzed with respect to industry, to time, and executive
position.
The results indicate that certain activities can assist in the achievement of
this state of alignment while others are clearly barriers. Achieving alignment is
evolutionary and dynamic. It requires strong support from senior management,
good working relationships, strong leadership, appropriate prioritization, trust,
and effective communication, as well as a thorough understanding of the

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business environment. Achieving alignment demands focusing on maximizing the
enablers and minimizing the inhibitors. The data show these factors to be
constant over time and to be nearly identical for business executives and for IT
executives. Furthermore, the data validate published anecdotal descriptions of
enablers and inhibitors.
Keywords: Alignment of IT plans with business plans, IT strategic
planning, IT management, information technology impact, organizational
strategies, enabling and inhibiting activities.

I. INTRODUCTION

Decades have passed. Billions of dollars have been invested on

information technology (IT). Yet, alignment which is defined as applying IT in an
appropriate and timely way, in harmony with business strategies, goals and
needs -- remains a key concern of business executives (Papp, 1998; King, 1995;
Henderson and Venkatraman, 1990 and 1996; Earl, 1983 and 1993; Luftman,
Lewis and Oldach, 1993; Luftman 1996; Goff, 1993; Liebs, 1992; Watson and
Brancheau, 1991). This definition addresses both how IT is aligned with business
and how the business should/could be aligned with IT. Frustratingly,
organizations seem to find it difficult or impossible to harness the power of
information technology (IT) for their own long-term benefit, even though there is
worldwide evidence (Earl, 1983 and 1993; Robson, 1994; King, 1995; Papp,
1995) that IT has the power to transform whole industries and markets.
How can companies achieve alignment? This paper describes the
activities consistently identified over the five years from 1992 to 1997 by both
business and IT executives that enable or facilitate alignment and those that
inhibit or hinder it. Anecdotal publications have described them (Wang, 1997).
Our research studies, underway since 1992 (Luftman, Papp, Brier, 1995), identify
these activities and establish benchmarks for exemplar organizations.

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 The survey data on which our findings rest were obtained from executives
from over 500 firms representing 15 industries (see Table 1 for demographics)
attending classes at IBM’s Advanced Business Institute. In addition to these
surveys, we used interviews and the observations from consulting engagements.
Analysis of the survey data shows that the six most important enablers and
inhibitors, in rank order are:

ENABLERS INHIBITORS
Senior executive support for IT IT/business lack close relationships
IT involved in strategy development IT does not prioritize well
IT understands the business IT fails to meet its commitments
Business - IT partnership IT does not understand business
Well-prioritized IT projects Senior executives do not support IT
IT demonstrates leadership IT management lacks leadership

What is striking about these lists is that the same set of topics (executive
support, understanding the business, IT-business relations, and leadership) show
up in both. In this paper we present the detailed findings of our study and then
discuss the reasons for these findings.
Alignment’s importance is well known. IT’s importance has been
documented since the late 1970's (McLean and Soden, 1977; IBM, 1981; Mills,
1986; Parker and Benson, 1988; Brancheau and Wetherbe, 1987; Dixon and
John, 1991; Niederman, et. al., 1991; Earl, 1983 and 1993). Alignment continues
in importance today as companies strive to link technology and business (Papp,
1995, Luftman, 1996). Alignment addresses both doing the right things
(effectiveness), and doing things right (efficiency).
Throughout the five-year research project reported here, the authors
applied the strategic alignment model presented by Henderson and Venkatraman
(1990). The components of our modifications of their model are shown in Figure
1. It is the relationships that exist among the twelve components of this model
that define business-IT alignment.

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I. BUSINESS STRATEGY

1. Business Scope – Includes the markets, products, services, groups of

customers/clients, and locations where an enterprise competes as well as the
competitors, suppliers and potential competitors that affect the competitive business
environment.
2. Distinctive Competencies – The critical success factors and core competencies
that provide a firm with a potential competitive edge. This includes brand, research,
manufacturing and product development, cost and pricing structure, and sales and
distribution channels.
3.Business Governance – How companies set the relationship between management
stockholders and the board of directors. Also included are how the company is affected
by government regulations, and how the firm manages its relationships and alliances
with strategic partners.

II. ORGANIZATION INFRASTRUCTURE & PROCESSES

4.Administrative Structure – The way the firm organizes its businesses. Examples
include central, decentral, matrix, horizontal, vertical, geographic, federal, and
functional.
5.Processes - How the firm’s business activities (the work performed by employees)
operate or flow. Major issues include value added activities and process improvement.
6.Skills – H/R considerations such as how to hire/fire, motivate, train/educate, and
culture.

III. IT STRATEGY

7.Technology Scope - The important information applications and

technologies.
8.Systemic Competencies - Those capabilities (e.g., access to information that is
important to the creation/achievement of a company’s strategies) that distinguishes the
IT services.
9.IT Governance - How the authority for resources, risk, and responsibility for IT is
shared among business partners, IT management, and service providers. Project
selection and prioritization issues are included here (See Section IV).

IV. IT INFRASTRUCTURE AND PROCESSES

10.Architecture -The technology priorities, policies, and choices that allow

applications, software, networks, hardware, and data management to be integrated into
a cohesive platform.
11.Processes - Those practices and activities carried out to develop and maintain
applications and manage IT infrastructure.
12. Skills - IT human resource considerations such as how to hire/fire, motivate,
train/educate, and culture.
Figure 1. The Twelve Components of Alignment (Luftman 1996)

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 In recent years, a great deal of research and analysis focused on the
linkages between Business and IT (Chan and Huff, 1993; Luftman, 1996; Earl,
1993; Henderson, Thomas and Venkatraman, 1992), the role of partnerships
between IT and business management (Keen, 1996; Ives, Jarvenpaa, and
Mason, 1993), and the need to understand the transformation of business
strategies resulting from the competitive use of IT (Boynton, Victor, and Pine,
1996; Davidson, 1996). Firms changed not only their business scope, but also
their infrastructure as a result of IT innovation (Keen, 1991; Foster, 1986).
Much of this research, however, was conceptual. Empirical studies of
alignment (Henderson and Thomas, 1992; Broadbent and Weill, 1993; Chan and
Huff, 1993; Baets, 1996) examined a single industry and/or firm. Conclusions
from such empirical studies are potentially biased and may not be applicable to
other industries. It was the lack of consistent results across industries, across
functional position and across time that was the impetus for our study.

II. STUDY DESIGN

The objective of our research was to determine (over time, regardless of
industry or executive position) the enablers and inhibitors to aligning business
and IT strategies. A study was conducted from 1992-1997 using responses from
1,051 executives representing over 500 US Fortune 1,000 organizations who
attended seminars addressing alignment at IBM's Advanced Business Institute in
Palisades, NY.
The objectives of the seminars were to assist executives in assessing the
positioning and contribution of IT in their organizations, and to identify their
personal role in aligning their organizations. The seminars were addressed to
senior business executives from various functional areas (e.g., finance,
marketing, H/R) of private and public sector organizations. Representative titles
included President, Chief Operating Officer, Chief Financial Officer, Chief
Information Officer, General Manager, Director of Human Resources, General
Manager, Senior Vice President of Sales and Marketing, Physician in Chief,
Provost, and State Senator. A cross-section of industries was represented,

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including insurance, health, finance, education, government, utilities,
transportation, and manufacturing. Table 1 describes the demographics of the
research population.

Industry Classification Survey Percentage

Finance/Banking 8.5%
Health/Health Services 4.4%
Insurance/Real Estate 10.8%
Manufacturing 23.4%
Refining 1.6%
Pharmaceuticals 1.6%
Public Administration 8.5%
Educational Inst. 9.5%
Government/Defense 2.2%
Business/Consulting 3.5%
Agriculture/Forestry 1.3%
Utilities 6.0%
Transportation 3.8%
Commerce 5.7%
Misc. Services 9.2%

Table1. Study Demographics

While they attended the seminar, the participants were asked to fill out a
questionnaire, which was a modified form of that developed by Henderson and
Thomas (1992). This questionnaire was based on the strategic alignment model
described in Figure 1. The questions were originally written for executives in the
health services industry. They were adapted by two of the authors (Luftman and
Brier) so that they are applicable to executives from any industry. The following
procedure was used to validate the questions:

• After the questions were modified, their universal applicability was

reviewed with other consultants and academics familiar with alignment.

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 • Structured interviews were held with executives attending the seminars in
1992 to ensure the appropriateness of the questions.
• The questions were reviewed during consulting engagements that focused
on issues of aligning IT and business strategies.
• To minimize the potential bias that might be inherent with the survey taken
after the seminar, the study was repeated with a group of executives not
taking the alignment seminar and the results were the same.

After teaching the seminars in which the tool was applied in 1993, we
conducted additional executive interviews to ensure that our conclusions for the
respective enablers and inhibitors were valid and understandable.
Many of the questions were revised based on the feedback from this pilot
study. Several iterations were necessary to identify and modify ambiguous and
troublesome questions. As a result of these assessments, we are confident in the
results obtained. The results presented in Section III are based on data taken
between 1993 and 1997.
The questionnaire asked the respondents to identify the three top enablers
and the three top inhibitors to achieving alignment between business and IT. The
questions were open-ended. As a result, the executives could give a free
expression of their opinions on factors from their own experience within their
firms rather than being limited to ideas generated by the researchers.
Before responding, each executive had spent a day in the seminar
discussing strategic alignment within the twelve-component alignment framework
presented in Figure 1. The purpose of the discussions was to establish a
common understanding of each component of the model. Practical examples of
each component were discussed to help in developing a working definition that
could be used by each individual to apply the model in their own organization.
Thus, each had a frame of reference from which to respond to the survey
questions.
The executives in this study were first asked to enter demographic
information such as name, title, organization, and industry. They were next asked

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to rate (using a 7 point Likert scale) the perceived strength of alignment within
their companies.
The executives were then asked, within the context of their function
(business or IT), to identify the three key enablers and inhibitors to achieving
alignment in their organization. This subjective assessment was used to
determine which specific considerations the executives believed aided and
hindered alignment. Separating the responses between business and IT
respondents tested the hypothesis that the respondent's functional area
influences the enablers and inhibitors described.
In all, 1,232 questionnaires were filled out, of which 1,051 proved usable.
Of these, 527 came from IT executives and 524 came from non-IT executives.
The respondents listed a total of 3,153 enablers and 3,153 inhibitors
As in any open-ended questionnaire, it is necessary to group the
responses so they fall into recognizable categories. The responses were
analyzed for similar keywords or phrases that would aid in the grouping process.
For example, references by respondents to effective or non-effective dialogue
between IT professionals and their business partners were sorted into "Good
IT/business communication" or "IT does not communicate well" in the final list of
categories. This was done with the answers obtained. The categories, which are
listed in Tables 2 and 3, had been established over a number of years. Once all
the questions had been categorized, the percentage in each category was
determined.
In addition, the executives categorized their firm into a specific industry.
This classification was checked against the organization's SIC code to place it
into an appropriate industry.

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 Table 2. Enabler Categories Table 3. Inhibitor Categories
Senior executive support IT/non-IT lack close relationship
IT involved in strategy development IT does not prioritize well
IT understands business IT fails to meet its commitments
IT, non-IT have close relationship IT does not understand business
IT shows strong leadership Senior executives do not support IT
IT efforts are well prioritized IT management lacks leadership
IT meets commitments IT fails to meet strategic goals
IT plans linked to business plans Budget and staffing problems
IT achieves its strategic goals Antiquated IT infrastructure
IT resources shared Goals/vision are vague
Goals/vision are defined IT does not communicate well
IT applied for competitive advantage Resistance from senior executives
Good IT/business communication IT, non-It plans are not linked
Partnerships/alliances Other
Other

III. STUDY RESULTS

OVERALL ALIGNMENT
In response to the overall question as to whether their own companies are
aligned:

• Half believed that their business and IT strategies were properly aligned.
• Forty-two percent said they were not aligned, and
• 8% were unsure or had no opinion

This result indicates that only half of the firms believe they have a
synergistic, cooperative business-IT relationship. The perceived lack of alignment
was the impetus for the next part of the study, the identification of factors that aid
or hinder alignment.

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ENABLERS AND INHIBITORS
The results of the analysis of enablers and inhibitors are shown in Figures
2 through 5. Figures 2 and 3 distinguish between business and IT executives and
Figures 4 and 5 examine the effect of time. Visual examination of Figures 2 and 3
indicates that there is little difference between the rankings by business
executives and IT executives for both the enablers and inhibitors. To test whether
this observation is correct, t-tests and an analysis of variance (anova) were
performed on the enablers and the inhibitors. The results, presented in Appendix
A, indicate no significant difference between the IT and non-IT participants'
perceptions of enablers and inhibitors in terms of mean scores and variances.
This suggests that each group viewed the enablers and inhibitors in the same
way and hence the relative ranking of the enablers and inhibitors is the area of
primary importance. This finding underscores the importance of each group's
collective assessment of the specific factors that aid or hinder the alignment of
business and IT strategy development.
Over the five-year span of the study, the ranking of importance for the
enablers and inhibitors remained relatively consistent (Figures 4 and 5). That is,
the factors are constants, rather than changing with fashion.

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 Figure 2. Enablers to Alignment; Business vs. IT Executives 1993-1997

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 Figure 3. Inhibitors to Alignment; Business vs. IT Executive 1993-1997

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 Figure 4. Enablers of Alignment by Year

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 Figure 5. Inhibitors of Alignment by Year

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 IV. DISCUSSION AND INSIGHTS

Our experience in consulting, researching, and teaching IT-business

alignment suggests that to improve IT-business alignment, organizations need to
focus on the activities management does (or does not do) to achieve its goals.
Consistently, over the five years of this research, the respondents indicated that
certain activities assist in achieving alignment while others are clearly barriers.
As shown in Figures 2 through 5, the activities identified as enablers and
inhibitors were comparable across industry, across business function, and across
time.
In this section, we discuss the six most frequently identified enablers and
inhibitors that were listed in Section 1. For convenience, they are repeated
below.

ENABLERS INHIBITORS
Senior executive support for IT IT/business lack close relationships
IT involved in strategy development IT does not prioritize well
IT understands the business IT fails to meet its commitments
Business - IT partnership IT does not understand business
Well-prioritized IT projects Senior executives do not support IT
IT demonstrates leadership IT management lacks leadership

For each enabler and inhibitor, we describe the importance of the factor
and provide illustrative examples from a variety of industries that show
successful ways of handling the situation. Except as noted by references, the
anecdotes come from companies participating in our research.

ENABLERS TO ALIGNMENT
Support from senior non-IT executives was ranked as the top enabler by
both IT and non-IT executives. Non-IT executives ranked this enabler even
higher than IT executives. This important finding highlights the need for business

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to be aware and supportive of technology innovations. Important considerations
include having business executives:

• recognize the value of information technology

• define and communicate vision and strategies that include the role of IT
• sponsor IT projects (e.g., provide leadership, funding).

Lack of support may translate into lack of funding and missed

opportunities for innovative application of information technologies. Insurance
giant CIGNA, for example, migrated their entire enterprise to a PC-based
Windows NT system running Microsoft’s Office 97 Suite. The IT team saw this
investment in technology as paramount to the success of the firm. CIGNA lost
over half a million dollars in 1993 whereas its 1997 profit was around $100
million. CIGNA management’s financial support and recognition of the strategic
value of such technologies resulted, at least in the short-term, in increased
efficiency and productivity of end-users, faster development of in-house
applications, and increased understanding among employees.
IT’s participation in creating business strategies and achieving its own
strategic goals was the second most important enabler. Both IT and non-IT
executives see the need for mutual cooperation and a close working relationship
in the strategy formulation process. They recognize that it is easier to achieve
alignment when cross-functional teams, including IT, create enterprise strategies.
Participation at this level should be frequent. Both IT and business need to listen
to one another, communicate effectively, and learn to leverage IT resources to
build competitive advantage. Each of the factors to achieve alignment are
important, but none of the others matter if there is not an atmosphere of open
and honest communications.
Some important considerations (based on our experiences) include:

• IT participating in the creation of business strategies

• defining and supporting effective IT governance processes (Figure 1)

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 • establishing binding IT-business partnership, relationship, trust
• effective marketing of the value of IT

Firms that successfully used cross-functional teams for strategy

development include Bristol-Myers Squibb and C-Cube Microsystems. At Bristol-
Myers Squibb an IT Review Board composed of IT and non-IT executives leads
the strategy and planning processes, identifies opportunities, and defines
priorities for IT. It also tracks projects and uses the concept of an IT–business
liaison to maintain and ensure service in the field for its customers (Luftman,
1997).
C-Cube, which designs and markets digital compression hardware and
software, used a cross-functional team to derive their client/server strategy.
Senior representatives from functional departments including sales, marketing,
and finance were chosen to participate in the evaluation process. The team
narrowed the list of vendors and chose the one that met the needs of the firm as
a whole. C-Cube’s CIO believes this participation allowed the firm to obtain buy-
in from all the groups using the system. The firm created a specialized, functional
system that meets everyone’s needs. The CIO also maintains a good relationship
with the CEO, which helps gain the needed senior executive support for IT.
Both IT and business executives contend that IT needs to understand the
firm’s business environment (customers and competitors). Important
considerations include:

• IT understands the business

• Business understands IT
• IT communicates in business terms
• IT focuses on applying technical understanding to identify business
opportunities

In the last decade IT understanding of the business has been crucial to

firms in the trucking industry. The Motor Carrier Act (1980) changed the face of

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competition. This act was designed to enhance the transportation of goods and
property by promoting an efficient and competitive transportation industry. The
industry that previously had relied on regulated income had to compete in a
market of falling demand and competitive pricing. C.R. England and Sons
Trucking Company responded by using information technology to manage these
efforts. Based in Salt Lake City, Utah, the company’s IT organization commits
itself to enhancing the ability of the business to deliver leading customer service.
One such application, their Quick Trace Program, allows customers to dial
directly into C.R. England’s system and review the status and locations for any
delivery. Satellite technology enables the company to pinpoint truck locations,
allowing information to be collected to provide this service to customers while
supporting business process measurements. This data is continually analyzed to
enhance results. "If we can measure it, we can manage it" is the motto at C.R.
England, and is a reflection of their success in alignment.
McGraw-Hill is another example of an IT organization that understands its
business. At McGraw-Hill, custom publishing for the college textbook
marketplace is focused on materials compiled in their PRIMIS application.
PRIMIS lets college instructors create a customized textbook tailored to the
specific needs of a course. Developed under the direction of McGraw-Hill editors,
the PRIMIS database contains core chapters and sections from existing
textbooks, journals, and articles. The professor selects and determines the
sequence of the material. Professors can also add their own material and notes.
The database of information and the supporting technologies represent an IT-
based business strategy. PRIMIS facilitated McGraw-Hill's strategy of building a
product tailored to specific requirements. In the context of strategic alignment,
there are important considerations for integrating the infrastructure. The
traditional "assembly-line" processes for textbook publishing (acquisition, writing,
editing, manufacturing, selling, and distributing) have been replaced by
processes designed to take advantage of the opportunity to build a customized
book electronically and produce it on paper where needed. The IT infrastructure

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identifies standards, processes, and skills that support this new "book-building"
infrastructure for the college textbook business.
Prioritization implies firms are able to incorporate technology into their
strategies in a timely manner so that they do not fall behind competitors.
Prioritization defines and supports effective IT governance processes (see Figure
1). A highly publicized example is the growth of the Internet. Many Internet
service providers did not anticipate its growth and, consequently, failed to
prioritize technology acquisitions and build appropriate infrastructures.
A company that has done this successfully is Delta Airlines, who applied
IT to develop a mission-critical system. Because of a strong IT-business
relationship, the project was given top priority and financial backing by top
management at Delta. This led, in turn, to effective project prioritization and
resulted in a strong competitive position for the airline and a saving of more than
$20 million. The system allows Delta to receive updates on weather conditions,
forecast traffic delays, and reroute passengers from problem areas. The system
has become such a vital part of the airline's operation that it is the single most
important strategic IT investment at Delta. 'If the operations center went offline,
the entire airline would shut down,' according to the Delta project manager.
Frequently the important leadership role that IT can play is only
recognized after a competitor has applied IT innovatively. IT innovation is
occurring at an increasing pace across all industries. Examples include
automated teller machines, airline reservation systems, leveraging data mining
point of sale information, and using the web to become an overnight success
(e.g., Amazon.Com).

INHIBITORS TO ALIGNMENT
Many of the key inhibitors are the inverse of the enablers. The order of
importance of the inhibitors is clearly different from the order of the enablers. The
most frequently cited inhibitors, by both IT and non-IT executives, are IT
activities. IT executives overwhelmingly rated the lack of a close working

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relationship as the number one inhibitor. This result is not surprising, given that in
most organizations IT executives do not participate in strategy formulation.
Business executives have to provide direction for IT initiatives. They have
to set policies for the acquisition, use, and retirement of company information
assets. Business priorities are set where value is expected to be realized. Only
business executives (as sponsors or champions) can drive the realization of
value from IT related projects. IT unto itself cannot provide the value. Therefore,
business policies must translate into priorities and projects for the IT
organization. It is critical to have this partnership to ensure that the correct IT
priorities are set. The vehicles for this governance process include steering
committees, IT-business liaisons, budget and human resource allocation
processes, IT organization, and value assessments.
IT executives, however, need to do their part to effectively prioritize their
workload, which was ranked as a top inhibitor by non-IT executives.
Bristol-Myers Squibb’s use of IT-business liaisons, described earlier,
exemplifies an effective implementation of one aspect of IT governance. Our
experience suggests that there is no one silver bullet for addressing this
important inhibitor. However, it is the effective use of all of the vehicles for
governance that lead to success. One should note that as difficult as it is to
establish these vehicles, it is even more difficult to maintain their effectiveness.
The problem of IT’s inability to meet its commitments has plagued
businesses since the introduction of the modern computer. Too often, IT is
overwhelmed by all it has to do. Business executives and end-users become
increasingly upset that projects are late and over budget. Recent studies suggest
30% of IT projects are cancelled before completion, 50 – 100% are over budget,
and 6 – 12 months late (Yourdon 1997). Most of these problems are not technical
but still have a significant impact on the credibility of IT. They are the result of not
adhering to basic project management disciplines, and not having a business–IT
relationship that facilitates business participation in all aspects of the project.
Some important considerations (and possible solutions) include:

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 • defining change management processes
• delivering smaller projects (breaking larger projects into smaller projects)
• IT sharing project risk with the business

Business understanding information technology and IT not understanding

business can have negative effects for IT. Organizations are providing sufficient
training and support to create growing ranks of empowered, computer-literate
knowledge workers. As a result, in some firms IT’s role as the primary systems
developer is being supplanted by end-user development using new,
sophisticated application tools. Telecommunications giant BellSouth is
experiencing this shift. Tired of large backlogs and missed deadlines, it
implemented a client/server system that stores electronic images of company
documents. The $3.45 million dollar project saves BellSouth approximately $17.5
million every year. They also cut the time required to create a new form down to
24 hours instead of 10 weeks. Such innovative use of IT is only possible when
senior business management understands and supports IT endeavors. Also, IT
did not understand the business until they were forced to do so.
The inability to understand the changing business environment is another
barrier to alignment for both IT and non-IT executives. Firms that do not keep
their customers happy by investing in technological enhancements to increase
customer satisfaction fall behind their competitors. An example of a firm that has
successfully used IT to improve customer service in a dynamic environment is
Charles Schwab Corporation, the discount brokerage firm. Schwab relies on
marketing and innovative uses of IT to offer investment programs to its clients.
Schwab's strategy involves the use of IT to lower costs and to provide superior
service at lower prices. Therefore, the IT strategy creates a distinctive
competency that positions Schwab in their market. All of their IT initiatives have
been driven toward customer service, including Telebroker (1989), a fully
automated telephone system for real-time stock quotes and order placement,
and StreetSmart (1993), software that lets clients trade through Schwab via a

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Enablers and Inhibitors of Business-IT Alignment by J.N. Luftman, R. Papp, and T. Brier
PC. In 1996 Schwab began to let customers trade mutual funds on its Web site,
becoming the first major brokerage firm to offer the service.
Schwab has to continually revisit and revise their strategy. Through the
Internet, the dynamics of the brokerage industry (and all industries for that
matter) are rapidly changing. E*Trade is an Internet based brokerage firm that is
competing with Schwab and others on pricing and service. Since costs are more
variable then they were in the past and industry entry can be achieved with far
less trading volume, competition is growing and innovative. Schwab has
responded with its investing website, the latest in a list of technology initiatives.
For Schwab, the IT strategy is integrated with the strategy for the business.
Finally, inhibitors are not independent. For example, if IT does not
prioritize well in the eyes of business executives, there is a strong connection, in
our experience, to a lack of close relationship between IT and business. The
implication, once again, is that addressing both enablers and inhibitors is not a
simplistic, one-answer solution. It is complex and ongoing. Organizations are
constantly looking for the one silver bullet to address their needs. Unfortunately it
takes many silver bullets to succeed but it takes but one silver bullet to kill.

VI. CONCLUSIONS
Business-IT alignment remains a major issue. Over a thousand executives
from different industries identified similar enablers and inhibitors to alignment
consistently over the five years studied.
Executives need to work toward minimizing activities that inhibit alignment
and maximize activities that bolster it. The results show that they should:

• concentrate on improving the relationships between the business and IT

functional areas,
• work toward mutual cooperation and participation in strategy development,
• effectively communicate in terms that their business partners understand
and appreciate
• maintain executive support, and

Communications of AIS Volume 1, Article 11 23

Enablers and Inhibitors of Business-IT Alignment by J.N. Luftman, R. Papp, and T. Brier
 • prioritize projects more effectively.

IT executives can be successful business leaders and keep their

organizations in constant alignment by continual focus on the enablers and
inhibitors described in this paper.
Editor’s Note: This paper was received on September 5, 1998 and published on March 3, 1999. It
was with the authors for revisions for approximately three months.

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 APPENDIX A
T-TESTS AND ANOVA BY IT AND NON-IT PARTICIPANTS

This appendix presents the results of t-tests and Anova calculations

performed for enablers and inhibitors. Table A-1 shows the results of a t-test for
determining whether the observed means for the distributions for the enablers
and the inhibitors are the same. Tables A-2 and A-3, respectively, present the
results of the ANOVA tests for business and IT participants and for enablers and
inhibitors to alignment.

Table A-1. T-test for Enablers And Inhibitors By IT And Non-IT

Participants

Business IT

Mean 112 112.6428571

Variance 9683.407407 10891.34921
Observations 28 28
Pearson Correlation 0.962239975
Hypothesized Mean 0
Difference
df 27
t Stat -0.119445253
P(T<=t) one-tail 0.452903469
t Critical one-tail 1.703288035
P(T<=t) two-tail 0.905806938
t Critical two-tail 2.051829142
The t-test performs a paired two-sample t-test to determine whether a
sample's means are distinct. This t-test form does not assume that the variances
of both populations are equal.

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 Table A-2. ANOVA of Business and IT Participants

Enabler Count Sum Average Variance

Senior executives support IT 2 648 324 722

IT involved in strategy development 2 508 254 1152
IT understands business 2 413 206.5 24.5
IT, non-IT have close relationship 2 366 183 98
IT shows strong leadership 2 272 136 2048
IT efforts are well prioritized 2 304 152 338
IT meets commitments 2 225 112.5 1404.5
Other 2 202 101 1922
IT plans linked to business plans 2 61 30.5 12.5
IT achieves its strategic goals 2 38 19 8
IT resources shared 2 22 11 72
Goals/vision are defined 2 30 15 8
IT applied for competitive advantage 2 23 11.5 4.5
Good IT/Business communication 2 25 12.5 12.5
Inhibitor
IT, non-IT lack close relationship 2 621 310.5 1740.5
IT does not prioritize well 2 540 270 32
IT fails to meet its commitments 2 451 225.5 264.5
IT does not understand business 2 348 174 72
Senior execs. do not support IT 2 328 164 512
IT management lacks leadership 2 265 132.5 0.5
IT fails to achieve strategic goals 2 217 108.5 112.5
Other 2 111 55.5 4.5
Budget & staffing problems 2 88 44 128
Antiquated IT infrastructure 2 57 28.5 40.5
Goals and visions are vague 2 38 19 72
IT does not communicate well 2 35 17.5 84.5
Resistance from senior execs. 2 31 15.5 40.5
IT, non-IT plans are not linked 2 23 11.5 24.5

Business 28 3136 112 9683.407

IT 28 3154 112.642 10891.35

Source of Variation SS df MS F P-value F crit

Rows 544569.2 27 20169.2 49.7359 7.7E-17 1.904823
Columns 5.785714 1 5.78571 0.01426 0.90580 4.210008
Error 10949.21 27 405.526

Total 555524.2 55
The two-factor analysis of variance (ANOVA) does not include more than one sampling per
group, testing the hypothesis that means from two or more samples are equal (drawn from
populations with the same mean). This technique expands on tests for two means, such as
the t-test.

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Enablers and Inhibitors of Business-IT Alignment by J.N. Luftman, R. Papp, and T. Brier
 Table A-3. ANOVA of Enablers and Inhibitors to Alignment

ENABLER Count Sum Ave- Variance

rage
Senior executives support IT 2 648 324 722
IT involved in strategy develop. 2 508 254 1152
IT understands business 2 413 206.5 24.5
IT, non-IT have close relationship 2 366 183 98
IT shows strong leadership 2 272 136 2048
IT efforts are well prioritized 2 304 152 338
IT meets commitments 2 225 112.5 1404.5
Other 2 202 101 1922
IT plans linked to business plans 2 61 30.5 12.5
IT achieves its strategic goals 2 38 19 8
IT resources shared 2 22 11 72
Goals/vision are defined 2 30 15 8
IT applied for competitive advantage 2 23 11.5 4.5
Good IT/Business communication 2 25 12.5 12.5
Inhibitor
IT, non-IT lack close relationship 2 621 310.5 1740.5
IT does not prioritize well 2 540 270 32
IT fails to meet its commitments 2 451 225.5 264.5
IT does not understand business 2 348 174 72
Senior execs. do not support IT 2 328 164 512
IT management lacks leadership 2 265 132.5 0.5
IT fails to achieve strategic goals 2 217 108.5 112.5
Other 2 111 55.5 4.5
Budget & staffing problems 2 88 44 128
Antiquated IT infrastructure 2 57 28.5 40.5
Goals and visions are vague 2 38 19 72
IT does not communicate well 2 35 17.5 84.5
Resistance from senior execs. 2 31 15.5 40.5
IT, non-IT plans are not linked 2 23 11.5 24.5

Source of Variation SS f MS F P-value F crit

Between Groups 544569.2 27 20169.23 51.55 1.49E-17 1.889426
Within Groups 10955 8 391.25

Total 5555
The analysis of variance (ANOVA) is used to test the hypothesis that means from two or more
samples are equal (drawn from populations with the same mean). This technique expands on the
tests for two means, such as the t-test.

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Enablers and Inhibitors of Business-IT Alignment by J.N. Luftman, R. Papp, and T. Brier
 ABOUT THE AUTHORS

Jerry Luftman is the Executive Director and Distinguished Service

Professor for the graduate information management programs at Stevens
Institute of Technology. His twenty-two year career with IBM included strategic
positions in management (IT and consulting), management consulting,
Information Systems, marketing and executive education. Dr. Luftman played a
leading role in defining and introducing IBM’s Consulting Group. As a practitioner
he held several positions in IT, including a CIO.
Dr. Luftman’s research papers have appeared in several professional
journals and he has presented at many executive and professional conferences.
His book, "Competing in the Information Age" recently published by Oxford
University Press, has been greatly received by industry and academia. His
doctoral degree in Information Management was received at Stevens Institute of
Technology.
Raymond Papp is an assistant professor with the Department of
Management Information Systems at Central Connecticut State University. Dr.
Papp completed his doctorate in Information Management at Stevens Institute of
Technology. His dissertation, "Determinants of Strategically Aligned
Organizations: A Multi-industry, Multi-perspective Analysis" is an empirical
investigation into the determinants of strategic alignment, specifically addressing
the impact of title/function, industry, and firm performance. His research has
appeared in professional journals and he has presented research at numerous
professional and executive conferences. He has worked as a computer analyst,
corporate trainer, and an independent consultant.
Tom Brier is a consulting instructor on the faculty of the IBM Advanced
Business Institute in Palisades, NY. and an adjunct professor in the School of
Computer Science and Information Systems at Pace University in White Plains,
NY. He specializes in methodologies to align information technology strategy to
organizational goals and in approaches to managing the human aspects of
change. He has facilitated planning sessions for senior management teams,

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Enablers and Inhibitors of Business-IT Alignment by J.N. Luftman, R. Papp, and T. Brier
using business analysis techniques to aid in developing organizational strategies.
His research has centered on the role of the Chief Information Officer, the
behavioral aspects of new technology implementation and the skill requirements
for workers in a networked world.
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 EDITOR
Paul Gray
Claremont Graduate University

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