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A Simple Instrument to Measure IT-Business Alignment Maturity.

Khaiata, Mohammed (AUTHOR) Zualkernan, ImranA. (AUTHOR) izualkernan@aus.edu

Information Systems Management. Spring2009, Vol. 26 Issue 2, p138- 152. 15p. 1 Black and White Photograph, 14 Diagrams, 2 Charts, 2 Graphs.

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*Business logistics *Standards *Information technology management *Business planning *Information & communication technologies *Strategic planning *Information resources management *Organizational learning Information technology equipment Cyberinfrastructure

IT-Business alignment maturity model

541614 Process, Physical Distribution, and Logistics Consulting Services 519190 All Other Information Services

The challenge of aligning Information Technology (IT) to business has often been cited as a key issue by IT executives. This paper presents a simple, flexible, and easy-to-use instrument that measures the alignment maturity between business and IT and identifies major gaps. The proposed instrument is based on Luftman's "Strategy Alignment Maturity Model" (SAMM); it directly encodes all attributes of SAMM alignment areas using a unidimensional framework. The instrument supports multiple levels of analysis with minimum assumptions about data using non-parametric statistical tools. In addition, the instrument provides an aggregation procedure to summarize the alignment maturity level for high-level executives. The instrument can also be customized to incorporate the contextual parameters of a company. In addition to the development of the instrument, this paper also shows how this instrument was applied to assess the alignment maturity level between IT and business in a rapidly growing company that had recently been publicly listed. The instrument was successful in identifying six major gaps for the company across the various alignment areas. These gaps were benchmarking, business metrics, strategic business planning, inter / intra organizational learning, architectural integration, and the impact of IT on business processes. [ABSTRACT FROM AUTHOR]

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Copyright of Information Systems Management is the property of Taylor & Francis Ltd and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

American University of Sharjah, Sharjah, UAE

1058-0530

10.1080/10580530902797524

37604193

Business Source Elite

A Simple Instrument to Measure IT-Business Alignment Maturity.

Keywords: IT-Business alignment; maturity model

1. Introduction Alignment between business and IT has often been cited as a key issue and a challenge by IT executives ([15]; [21]). The need for such an alignment has long been recognized ([ 3]; [ 5]; [10]; [14]; [20]). There is also emergent evidence that IT and business alignment do have an impact on organizational performance ([ 4]; [22]; [21]). While the concept of alignment has many definitions such as integration, linkage, harmony, bridge or fusion ([ 1]), one of the most commonly used models for IT-business alignment is the Strategic Alignment Model (SAM) ([10]).

However, alignment models have been criticized by not being applicable in many cases where the business is not following a systematic strategic planning process, if the strategy is being developed on the fly, or if the Chief Executive Officer CEO and the Chief Information Officer CIO are developing the strategy together (Shpliberg et al., 2007). Nevertheless, the same study also showed that almost three quarters of the 504 respondents from 452 companies believed that their IT capability was neither highly aligned nor effective ([20]).

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One key issue in IT and organizational alignment is how to "measure" alignment. [12]) points out that matching and moderation are two ways to measure alignment. Matching tries to match aspects of IT strategy with components of business strategy. The moderation view, on the other hand, views pairs of business and IT strategy and their impact on business performance ([ 3]). Several studies have tried to measure alignment. [ 1]) modified the SAM model to provide a step-by-step process that can be used to assess organizational alignment based on executive feedback. Specifically, their approach tries to identify various patterns and perspectives (e.g., technology potential) to provide feedback for executive management decision making. Similarly, [ 9]) applied modeling of the business and IT strategies for Small and Medium Enterprises (SMEs) and mapping the gaps from one to the other. [ 2]) identified 29 items to measure IT strategy and structure itself. [11]) used nine items (e.g., quality service) for measuring business strategy and nine parallel items to measure IT strategy. A mean alignment score was calculated by multiplying the business strategy rating with the corresponding IT strategy rating. [13]) developed an instrument to match an IT plan with the Business Plan. [18] compared measures of social dimensions of alignment such as matching of current objectives or vision. [23]) proposed using cognitive measures of alignment. [ 8]) used a survey instrument based on Luftman's Strategy Alignment Maturity Model (SAMM) ([16]) to measure the maturity levels of strategic alignment along multiple key dimensions such as communications, governance, skills, etc. A key component of this instrument is that it divides the questions into strategic, tactical, and operational levels.

This paper presents a simple instrument to measure the alignment maturity based on [16] SAMM model. However, unlike [ 8]), our instrument directly encodes the various components of the SAMM using a unidimensional approach and uses non-parametric statistical methods for analysis. We have also developed an aggregation procedure that summarizes the overall maturity of each of the areas of SAMM. We applied this instrument to measure and analyze the IT-Business alignment maturity of a rapidly growing construction- related company (DUG).

The rest of the paper is organized as follows. Section 2 presents the Strategic Alignment Maturity Model (SAMM). Section 3 presents the design of the instrument. Section 4 presents a case study of applying the instrument to DUG, and section 5 concludes the paper and discusses the limitations and future work.

2. Strategic Alignment Maturity Model [16]) proposed SAMM as one way to measure alignment maturity of companies. SAMM proposes that IT- Business alignment can be captured according to six areas of maturity:

• _B_Communication maturity to ensure the ongoing knowledge sharing across the organization and the understanding of business by IT and vice versa;

• _B_Competency / Value measurement maturity to demonstrate the value IT is contributing to the business;

• _B_Governance maturity to ensure that the appropriate participants of business and IT are reviewing the priorities and allocation of IT resources;

• _B_Partnership maturity to reflect the level of trust developed among participants of IT and business in sharing risk and rewards;

• _B_Scope and architecture maturity to signify the level of flexibility and transparency the IT is providing to business; and

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• _B_Skills maturity to reflect the level of innovation, change readiness, hiring and retaining, and how they are contributing to the overall organizational effectiveness.

For each of these areas, this maturity model classifies the alignment between business and IT into five levels:

1. _B_Initial / Ad hoc process, where business and IT are not harmonized or aligned;

2. _B_Committed process, where the organization has committed to becoming aligned with IT;

3. _B_Established / Focused process, where the alignment is established between IT and business and focused on business objectives;

4. _B_Improved / Managed process, where the concept of IT as a "Value Center" is reinforced; and

5. _B_Optimized process, where the strategic planning of business and IT is integrated and reached a co- adaptive stage.

In addition, SAMM describes the various attributes that contribute to each of the six areas. For example, the six attributes that contribute to the "Communication" area are: ( 1) understanding of business by IT, ( 2) understanding of IT by business, ( 3) inter / intra organizational learning, ( 4) protocol rigidity, ( 5) knowledge sharing, and ( 6) liaison breadth / effectiveness. Collectively, the six areas have thirty-eight attributes defined. For example, the "Competency / value measurement" and "Governance" areas have seven attributes each.

For each attribute, SAMM defines the characteristics at various levels of maturity. For example, the attribute "Understanding of Business by IT" is "Minimum" at Initial( 1) level of maturity, "Limited IT Awareness" at Committed( 2) level, "By Senior and Mid Management" at Established( 3) level, "Pushed Down Through the Organization" at Managed( 4) level, and "Pervasive" at the Optimized( 5) level ([16]).

The primary objective of this research is to build a simple, flexible, and easy-to-use instrument to determine the level of alignment between IT and business. The secondary objective is to determine if the outcome yields interesting insights into alternative remedial strategies for better alignment.

3. Designing the Survey Instrument The primary design criteria for the survey instrument were simplicity, flexibility, transparency of mapping to SAMM, and ease of deployment and analysis. In addition, we wanted the instrument to provide a high-level view of alignment maturity for the upper level management.

SAMM consists of six primary alignment areas. Each area has multiple attributes. The maturity level for each area is clearly defined ([16]). For example, Table 1 shows the maturity levels of each attribute of the "Skills" area.

Table 1. The Maturity of Attributes for the "Skills" Area in SAMM

AttributesAlignment Maturity Level

Initial (1) Committed (2) Established (3)

Improved (4) Optimized (5)

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AttributesAlignment Maturity Level

Initial (1) Committed (2) Established (3)

Improved (4) Optimized (5)

A1 Innovation, Entrepreneurship

DiscouragedDependant on Functional Organization

Risk Tolerant Enterprise; Partners; & IT Managers

The Norm

A2 Cultural Locus of Power

In the Business

Functional Organization

Emerging Across the Organization

Across the Organization

All Executives including CIO & Partners

A3 Management Style

Command & Control

Results; Consensus-Based

Consensus; Results-Based

Profit / Value Based

Relationship-Based

A4 Change Readiness

Resistant to Change

Dependant on Functional Organization

Recognized Need for Change

Programs in Place at Corporate Level

Proactive; Anticipate Change

A5 Career Crossover

None Minimum Dependant on Functional Organization

Across the Functional Organization

Across the Enterprise

A6 Education, Cross Training

None Minimum Dependant on Functional Organization

At the Functional Organization

Across the Enterprise

A7 Social, Political, Trusting Interpersonal Minimum Primarily

Transactional Environment

Emerging Among IT & Business

Achieved Among IT & Business

Extended to External Customers & Partners

Environment Minimum Primarily Transactional Environment

Emerging Valued Service Provider

Valued Service Provider

Valued Partnership

A8 Hiring and Retaining Best Talent

No Program Technology Focused

Tech./Business Focus; Retention Program

Formal Program for Hiring & Retaining

Effective Program for Hiring & Retaining

For example, as Table 1 shows, the maturity of the "Innovation and Entrepreneurship" attribute ranges all the way from "Discouraged" at the Initial( 1) level to "Norm" at the Optimized( 5) level. Similarly, the value of "Career Crossover" attribute ranges from "None" at the Initial( 1) level to "Across the Enterprise" at the Optimized( 5) level.

We used a unidimensional framework to construct questions for the survey; one question was developed for each attribute of each area for thirty-seven questions for the 38 attributes; two attributes were merged into one question. Table 2 shows the various questions developed for the "Skills" area as shown in Table 1. As Table 2 shows, we developed one question for each attribute. For example, in order to measure the maturity level of the "Innovation and Entrepreneurship" attribute, the respondent is asked about what they would do if they came up with an innovative idea. The question allows them to select one of five possible options, where each option corresponds to a maturity level for that particular attribute. For example, selecting the option of 'entering innovative ideas into a system to be shared' would correspond to a maturity level of Improved ( 4). The two attributes of "Career Crossover" and "Education Cross Training" were encoded into one question that reads 'In our company, staff has the flexibility to change their career path and get the needed training''

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Table 2. Uni-Dimensional Questions for each Attribute of "Skills" Area in SAMM

AttributeQuestion Sample Respondent Group

A1 When you come up with innovative ideas that you believe may enhance the business 1. I don't share such ideas with anyone 2. I share them, but they get evaluated in a conservative manner 3. I share them if they don't imply any risk to the current business 4. I enter them into a system where everybody can comment on them 5. I convey them hoping that the management will adopt them like they did for other staff

IT Management Staff IT Staff

A2 The power / influence in our company is 1. In the hands of business executives at head office 2. Extended to the managers of subsidiaries / sites 3. Extended to lower management (commercial manager, site manager, design manager, etc) 4. Dependant on the personality of staff 5. Extended to all staff including IT

IT Management IT Staff

A3 My manager cares most about 1. Executing his / her instructions 2. Results 3. Consensus among our team 4. Profit / value creation 5. Maintaining our relationships internally and externally

IT Management IT Staff

A4 How easy is it to do your daily tasks in a new way if you get the proper training? 1. Very difficult 2. Difficult 3. Neutral 4. Easy 5. Very easy

IT Management Staff IT Staff

A5,6 In our company, staff has the flexibility to change their career path and get the needed training 1. Never 2. Yes, To a certain level 3. It varies among sites / subsidiaries 4. Yes, within the same site / subsidiary 5. Yes, across sites / subsidiaries

IT Management IT Staff

A7 Trust in our company 1. Varies from one staff to another 2. Varies from one situation to another 3. Is being established among sites / subsidiaries 4. Is everywhere among all staff across sites and subsidiaries 5. Is extended to subcontractors and suppliers

IT Management IT Staff

A8 Hiring and retaining talented people in our company 1. Does not follow a predefined program 2. Is done according to their skills neglecting the position requirements 3. Is done according to the position requirements 4. Has defined program of hiring and retention 5. Is following an effective program

Dropped

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Since SAMM categorizes maturity into five distinct levels, we decided to use a 1 to 5 Likert scale to measure the response to each question. The responses are considered discrete and mutually exclusive. Consequently, each response to a question is represented by an ordinal number. Since the equidistance assumption does not hold for such Likert scale values, rather than using mean and standard deviation, we decided to use the central tendency given by the median and the dispersion as measured by inter-quartile range or non-parametric statistics such as 1-Sample Sign Test as the primary analysis instrument for each question ([ 6]).

We also wanted the instrument to be able to incorporate divergent views of the various roles being played by respondents in an organization. The instrument classifies organizational roles in accordance with SAM model. As Figure 1 shows, from an alignment perspective, SAM divides organizational roles into four different areas; business strategy, IT strategy, organizational infrastructure and processes (business operations), and IT infrastructure and processes (IT operations) (

Graph: Figure 1. Roles for IT-business alignment.

[10]).

Accordingly, the instrument explicitly addresses four different groups. Business management group is the most appropriate to address business strategy issues. IT management group, on the other hand, can best address IT strategy issues. Business staff group is most familiar with business operations. Finally, IT staff group is the most competent in addressing IT operational issues.

Table 2 shows an example of how the instrument incorporates divergent views for a particular company. As Table 2 shows, for this company it may not be appropriate to ask upper management about the power locus (A2 in Table 2). However, an answer to these questions from IT Management and IT Staff may be informative. In addition, since multiple attributes are used to measure a particular alignment area (like "Skills," for example), the instrument allows the flexibility of dropping some questions altogether. For example, A8 attribute in Table 2 has been dropped to account for political realities.

Another key objective of the survey design was to provide a high-level aggregated summary of IT and business alignment to upper management. To achieve this, we developed an aggregation procedure for calculating an overall "maturity level" for each area depending on the maturity ratings from each of the attributes. For example, from the responses for the eight attributes in the governance alignment area, we want to derive an ordinal number from 1 to 5 to indicate the overall maturity level of governance as a whole. In addition, following Luftman, we want to identify maturity levels that are between the ordinal numbers. For example, 1+ to indicate that the maturity level is between levels 1 and 2 but is nearer to level 1. The aggregation procedure also needs to consider the following constraints:

1. The number of respondents for each attribute might be different.

2. The median and confidence intervals of the median for each attribute may be different.

3. The median might not be an ordinal number that corresponds exactly to an alignment level.

The aggregation procedure is a heuristic that looks at the relationship between the overall modes of each alignment area against the central tendency of each attribute given by its median. If most of the medians are less than the mode, then the alignment maturity level is considered(mode-). On the other hand, if most of the

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medians are more than the mode, then the maturity level is counted as (mode+). The overall procedure for applying this heuristic is described below.

Assume that a maturity area A (e.g., Communications) is measured through questions q ,.. q corresponding to attributes a ,.. a . Note that the number of responses for each question will be different because not all respondents may answer all the questions.

1. Based on respective responses, calculate and truncate the median for responses (Likert scale 1 to 5) to each question q

2. Calculate the overall mode of truncated medians across all questions {q }.

3. If there is a single mode then:

a. If values of all truncated medians for each question (q ,.. q ) are equal to the mode from Step 2, the alignment maturity level of the concerned area is "mode."

b. If not, then calculate α, the number of truncated medians greater than the mode, and β; the number of truncated medians smaller than the mode.

i. If α > β, the alignment maturity level of the concerned area is "mode+"

ii. If α < β, the alignment maturity level of the concerned area is "mode-"

iii. If α = β, then the alignment maturity level of the concerned area is "mode."

4. If there are more than one mode, the alignment maturity level of the concerned area is the "lowest mode+".

The next section describes an application of the survey instrument in the context of a fast growing construction-related company.

4. Validation In order to validate the instrument, we selected a company where one would expect IT and business misalignment caused by organic and acquisition-based rapid growth; the company grew five times its size in three years. DEF United Group (DUG) is one of the top three interiors specialty contractors in the world. DUG's primary business can be divided into two main sectors; manufacturing, where the company produces interior fittings, joinery, upholstery, etc. and contracting, where the company executes contracts of fit-out, refurbishment, furniture and fixtures. The company employs over 8,000 individuals representing over 30 nationalities and has more than 21 branches / subsidiaries (business units) around the world. DUG was recently listed on multiple stock exchanges. The organizational structure of DUG is heavily project-centric. Every branch (organic growth) / subsidiary (acquired company) has multiple projects, and each project is an autonomous unit including many departments. Due to the project-centric culture, each project follows its own governance mechanisms within overall corporate governance guidelines.

i 0 m

0 m

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The IT department of DUG supports the entire group including all sites and subsidiaries around the world. The IT department is centralized and reports to Strategy Managing Director. Until 2005, the IT department was composed of four people. The primary activities of the IT department in 2005 were a rudimentary help desk function and technical support of a simple IT infrastructure. In January 2007, a new IT Director was hired to head the IT department. The new IT Director found that basic IT needs of the company were not being fulfilled; the massive growth in business had apparently happened with little consideration of IT. As of December, 2008, the IT department had grown to 42 individuals.

Subsequent paragraphs will explain the methodology we followed to apply this survey instrument, data collection, data analysis, and detailed discussion of findings.

4.1 Methodology The methodology followed in applying the survey instrument to DUG adheres to the guidelines recommended by [25]) as described below.

Each generic question used in the survey was modified to minimize subjective judgment or interpretation of the question. In addition, some questions were rephrased while addressing them to different groups. As the instrument postulates, we also solicited feedback from various stakeholders in the organization. The IT Director (IT Management group) indicated that the generic questions were not adequately tailored to the context of the company. For example, an option in the question about "Cultural Locus of Power" in the "Skills" area that reads 'Emerging across the Enterprise' was changed to 'Extended to lower management (commercial manager, site manager, design manager, etc.)'' A first-line manager (Business Operations group) also provided constructive feedback about number of questions. The feedback from one General Manager (GM) (Business Management group) was generally negative. Her view reflected the maturity level of DUG and the perception of IT by the management in DUG. For example, this particular GM did not understand why questions related to strategy, governance, value measurement, and skills were relevant to IT. Based on collective feedback from various stakeholders, several questions were rephrased (5 questions), paraphrased (3 questions), dropped (1 question), and were addressed to different groups (6 questions). It should be noted that this was an iterative process that eventually resulted in a survey that was consistent with the views of all stakeholders. The final revised survey was shown to the IT Director again to ensure its validity and suitability for DUG.

The survey was made completely anonymous by hosting it on a third party survey engine. One survey for each of the four groups of Management, Staff, IT management, and IT staff was created and the questions were shuffled within each survey so that questions about the same alignment area do not fall next to each other. A "Test Collector" (test link) was created for each survey initially, and all the four links were tested before rolling them out to DUG employees, and then additional 23 different collectors were created for a staff survey to determine their site / subsidiary. Four different collectors for management were created. Another link was created for IT Management and another one for IT staff. After collecting the responses and analyzing the results, a qualitative analysis was conducted with the IT Director through a set of post-survey interviews.

Construct validity of the survey was established by using the unidimensional framework and by incorporating feedback from various key informants such as the IT Director. Addressing the same questions to multiple groups like staff, IT Management, and / or Management can also be considered as multiple sources of evidence.

The internal validity was achieved through two mechanisms; the use of the well-known strategic alignment maturity model (SAMM) and the multiple reviews that were done to make sure that survey questions did not contain any internal contradictions.

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Since this case study was carried out in a single company, the results are not intended to be generalized ([25]). However, from an external validity perspective, the logic underlying this study can be replicated at another company.

Finally, three mechanisms were used to address reliability; the use of well-defined and documented protocol, developing a case study database, and crosschecking the final results with the IT Director.

4.2 Data Collection The survey was rolled out by sending an email from the IT Director with blind carbon copy for every concerned subgroup with the properly tested link. Subgroups are segregated by branch / subsidiary / project for staff, and Managing Directors (MDs), General Managers (GMs), Directors, and Project Managers (PM) for management. It was clearly stated that the survey was completely anonymous. People were given two weeks to respond, and a gentle reminder embedded in a "Thank You" letter was sent by the IT Director to all concerned people after ten days.

Figure 3 summarizes the responses by group. As Figure 2 shows, the number of responses from management, IT Staff, and IT management is relatively small because the number of their actual population (∼ 100) is small in comparison with the number of staff at DUG.

Graph: Figure 2. Distribution of survey respondents.

Graph: Figure 3. Dotplot of responses to the "Protocol Rigidity" attribute of the "Communications" area.

4.3 Data Analysis We analyzed the responses of each individual attribute in each alignment area using dot plots for response description, median for central tendency, and calculated approximately 95% confidence interval (CI) with Non- Linear Interpolation to measure dispersion (as a surrogate for variance) according to the 1-Sample Sign test which has very minimal assumptions about the data ([ 6]). We also used demographic distinction among different segments such as gender, seniority, company experience, industry experience, and business unit.

Following is an example of analyzing the "Protocol Rigidity" attribute, which falls under the "Communications" alignment area. The median response to this question (n = 81) was 3 (on a scale of 1 to 5) and the 95% confidence interval using the 1-Sample Sign Test was between 3 and 4. The distribution of responses from the various types of informants is shown in the stacked dot plot illustrated in Figure 3. This Figure suggests that the majority of staff believed that it was easy to communicate with the IT department. This is consistent with what Management and IT Management believed as well. When segregating the Staff responses into gender, however, some male employees felt more difficulties in communicating with IT as opposed to the female employees. Moreover, when segregating by business type, it seems that branches (organic growth) felt more difficulties in communicating with IT than subsidiaries (acquired companies).

In addition to a microanalysis of individual attributes like "Protocol Rigidity," we also carried out a macro- analysis of each of the six areas of alignment.

Figure 4 shows a graphical summary of responses for all "Communication" attributes sorted by their median and then confidence intervals. "Inter / intra organizational learning" has the lowest maturity followed by "Understanding of IT by Business" and then by "Understating of Business by IT". "Knowledge Sharing", "Protocol Rigidity", and "Liaison(s) Effectiveness" seem to have the highest level of maturity. The "Liaison(s) Effectiveness" attribute has relatively high variability (Confidence Interval CI = 1.7) in comparison to other

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attributes. This larger variance could perhaps be explained by the fact that the last attribute only had 9 respondents as opposed to between 67 to 81 respondents for other attributes. An application of the aggregation procedure described earlier yields an overall alignment maturity level of 3- (Committed-) for this area. This means that, the "Communication" area is reasonably aligned for this company.

Graph: Figure 4. Communication alignment summary.

Figure 5 shows a graphical summary of "Value-measurement" attributes sorted by their median and then by confidence intervals. "Benchmarking" and "Business Metrics" have low maturity while other attributes such as "Balanced Metrics," "Formal Assessments and Reviews," "Continuous Improvement," and "IT Metrics" have higher levels of maturity. Since the number of respondents is fairly small for this area (between 4 and 9), the variability is relatively high. "IT Metrics" attribute has high variability (CI = 2.3). Post-survey interviews indicate that this may be because the management believes that IT Metrics are focused on serving the business while IT management believes the IT metrics are purely technical in nature. "Service Level Agreements" (SLAs) attribute also has high variability (CI = 2) for a similar reason; post-survey interviews indicates conflicting views between IT Management and Management. In specific, since the SLAs were being rephrased and redefined in a new way within the IT department, the IT Management group believed that SLAs were not mature. On the other hand, the Management group believed that the maturity level is high because old SLAs are in place for most sites / subsidiaries. Similarly, the "Formal Assessments / Reviews" attribute and "Continuous Improvement" attribute both have very high variability (CI = 3) as well. These can perhaps be attributed to disagreement on the nature of SLAs that form the foundation for both attributes. According to the aggregation procedure, the alignment maturity level is 3- (Committed-) for this area.

Graph: Figure 5. Value measurement alignment summary.

Figure 6 shows a graphical summary of all governance attributes sorted by their median and then by confidence intervals. This Figure shows that most governance attributes have low levels of maturity. "IT Investment Management" and "Reporting of the CIO" seem to have higher levels of maturity. The "Business Strategic Planning" attribute has high variability (CI = 2) because of small number of respondents (n = 4) and an outlier who claimed that business strategic planning was done within subsidiaries while all other respondents reported the planning to be centralized. The "IT Organization Structure" attribute has variability (CI = 2) because there is an outlier among the IT Management group who believed that IT authority is delegated to all sites / subsidiaries except for strategic IT issues. The "Prioritization Process" attribute also has high variability (CI = 2) because of the conflicting opinions among the IT Staff group who believe that IT department gives the highest priority to projects that fix current problems while the Management group believes that IT department gives priority to projects that add value to business. "IT Strategic Planning" also has high variability (CI = 3) because there is an outlier that believes that IT planning is done at global level while most respondents believed that IT planning is done with a short-term scope and one respondent thought that the planning was ad-hoc. The "IT Investment Management" has somewhat high variability (CI = 1.7) because there is one outlier among the IT Management group who believed the IT Investment Management is based on justifying the cost only. According to the aggregation procedure, the alignment maturity level for "Governance" is 2+ (Established+).

Graph: Figure 6. Value measurement alignment summary.

Figure 7 shows a graphical summary of all "Partnership" attributes sorted by their median and then by confidence intervals. This Figure shows that "Role of IT in Business Planning," "Shared Goals, Risks and Rewards," and "IT Program Management" seem to have a medium level of maturity while "Relationship / Trust

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Style," "Business Sponsor / Champion," and "Business Perception of IT" have higher maturity levels. The "Role of IT in Strategic Business Planning" has high variability (CI = 2) because there is one respondent who believed the IT allows the business to acquire new opportunities. The "Shared Goals, Risks, Rewards, and Penalties" has very high variability (CI = 3.5) because contrary to the IT Management group, the Management group believed that IT and business shared the risks and rewards. The "IT Program Management" element also has high variability (CI = 2). The "Relationship / Trust Style" has high variability (CI = 1.8) because the Management group responses were skewed to higher level than the IT Management group. "Business Sponsor / Champion" also has very high variability (CI = 3). "Business Perception of IT Value" has high variability (CI = 1.8) because of the conflicting views of the IT Management group who believed that business perception of IT value was very low, while the Management group believed that IT played a strategic role in business or at least IT allowed the business to run effectively. According to the aggregation procedure, the alignment maturity level of "Partnership" is 2+ (Established+).

Graph: Figure 7. Partnership alignment summary.

Figure 8 shows a graphical summary of all "Architecture" attributes sorted by their median and then by confidence intervals. The level of maturity for "Architecture Integration" and "Role of IT; Traditional / Enabler / Driver / External" is low. The level of maturity for "Architecture Transparency" and "Standards Articulation" is high. The variance is low for all attributes and there is semi-consensus on the alignment maturity levels among respondents. The "Standards Articulation" has high level of maturity because the IT department recently made a significant effort to address the standardization issues across the group. The lowest value of maturity is for "Systems Integration" because there is no well-defined Enterprise Architecture, and the company does not have central systems such as an Enterprise Resource Planning System (ERP). According to the aggregation procedure, the alignment maturity level for "Architecture" is 1+ (Initial+).

Graph: Figure 8. Architecture/scope alignment summary.

Figure 9 shows a graphical summary of all "Skill" attributes sorted by their median and then by confidence intervals. As the Figure shows, most attributes have medium level of maturity except "Innovation and Entrepreneurship" and "Change Readiness" that have higher levels of maturity. The "Trust" element has high variability (CI = 2) because some IT Staff members believe that trust is pervasive in the organization and that it is even extended to suppliers and subcontractors. The responses from other IT Staff, the IT Management, and the opinion of IT Director support a lesser maturity level for this attribute. According to the aggregation procedure, the alignment maturity level is 2+ (Established+) for "Skills."

Graph: Figure 9. Skills alignment summary.

Figure 10 summarizes the aggregate maturity levels of the six alignment areas sorted from minimum to maximum. This Figure presents an interesting overall picture of alignment in an organization where "Communication" and "Value-measurement" are at Committed level of maturity. However, "Governance", "Skills", and "Partnership" are at the Established level. There seems to be a lack of maturity in the "Architecture" area, which is at the Initial level. This alignment picture is consistent with the profile of the company that grew very rapidly and had to focus on value-measurement and communication to keep together a diverse set of businesses and relationships. Governance, Skills and Partnership between IT and Business are less established. Because the company has grown so rapidly and given the variant nature of businesses, the IT Architecture has lagged behind in terms of maturity.

Graph: Figure 10. Aggregate alignment summary.

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4.4 Discussion At macro level, "Architecture" is the weakest alignment area for this company. However, within this weak area, there are some attributes that have high maturity levels. Similarly, within areas of higher maturity there are attributes that have low maturity levels. For example, "Value-measurement" has two attributes identified as gaps (benchmarking and business metrics) while "Governance" has only one element identified as a gap (business strategic planning).

At micro level, we found that all the attributes of the "Partnership" and "Skills" alignment areas have relatively good maturity levels. All other alignment areas have one or more weak attribute that has relatively low maturity levels. Figure 11 shows a graphical summary of the worst attributes across all alignment areas sorted by their median and then by confidence intervals.

Graph: Figure 11. The worst alignment attributes.

As Figure 11 shows, "Architectural integration" attribute has the lowest maturity. The low maturity for this attribute is primarily due to the fact that there is neither an Enterprise Architecture nor systems like an ERP system to provide the needed level of integration, flexibility, and / or the required agility for the company. There is consensus among respondents (CI = 0) that the maturity level is low for this attribute. "Inter / intra organizational learning", falls under the "Communication" area. The responses for this attribute fall either between the first and second maturity level, which means that learning is done rarely or in an ad-hoc manner when required. "Benchmarking," falls under the "Value-measurement" alignment area. Benchmarking is currently not practiced across the group. However, post-survey interviews suggest that this may be done in an informal manner. "Role of IT; Traditional / enabler / driver / external" also has low level of maturity meaning that IT's role in delivering value to the business in terms of removing constraints or enhancing the efficiency of business processes is not clear. "Business strategic planning" falls under the "Governance" alignment area. Post-survey interviews indicate that such planning is done when required and not formalized across the company. The relatively high variability (CI = 2) in responses for this attribute is due to an outlier that believed that planning is done within the sites / subsidiaries. Finally, "Business metrics" falls under the "Value- measurement" alignment area. Post-survey interviews suggest that the company seems to be focused on operational level and on short-term objectives.

Out of the six attributes that are at lowest levels of maturity, IT can address three attributes internally by focusing on the well-known areas of IT governance, enterprise architecture, and knowledge management. However, the other three attributes including benchmarking, business strategic planning, and business metrics have to be addressed by business rather than IT. As Figure 12 shows, a focus on these three areas will also have indirect impact on other alignment factors.

Graph: Figure 11. Potential impact of governance, enterprise architecture and KM on alignment attributes.

It is clear that the survey instrument has provided many insights into the alignment maturity within DUG and highlighted the weakest alignment areas to be addressed. A brief discussion of each of these suggested remedies is provided in the context of DUG in subsequent paragraphs.

5. Governance We carried out a post-survey analysis of IT governance at the company by using [24] IT governance framework. This framework views IT governance as "specifying the decision rights and accountability framework to encourage desirable behavior in the use of IT". This framework divides the primary IT decisions into decisions about IT Principles, IT Architecture, IT Infrastructure Strategies, Business Applications Needs,

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and IT Investments. The decision makers are classified into "Archetypes" like Business Monarchy, IT Monarchy, Feudal, Federal, Duopoly, and Anarchy.

An interview with the IT Director at DUG was conducted to map the current IT Governance structure of DUG. According to this interview, for decisions involving IT Principles, the inputs are mainly solicited from the IT Monarchy. However, this is not a good governance mechanism for DUG because geographical and product diversity of businesses makes a Federal input much better option for soliciting such inputs. For IT Infrastructure Strategies, DUG also solicits inputs from the IT Monarchy only. This is reasonable because IT procurement is centralized and no infrastructure installation is done outside the head office. However, this practice does not work well for the acquired companies since they will have their own decentralized infrastructure strategies. Therefore, Federal may be more appropriate model for this decision as well. For Business Application Needs the inputs are currently solicited from the Business Monarchy. In the absence of clear enterprise architecture, this practice is not recommended because it has a negative impact on the IT architecture, skill set, and infrastructure; in many cases, the business monarchy is unable to choose the best application it needs because of the diverse nature of the business and a weak understanding of the real business users. Consequently, Federal may be the most appropriate input solicitation mechanism for business application needs as well. Once these three primary gaps in internal IT Governance are fixed, the maturity level of Governance and architecture alignment elements should be enhanced. Figure 13 shows DUG's current governance mechanisms and the suggested shift in the three areas.

Graph: Figure 13. DUG's current governance and the proposed shift.

6. Enterprise Architecture A well-defined enterprise architecture (EA) should help DUG define its "Foundation of Execution" ([19]) for all IT systems. This, in turn, should help define clear relationships among the blueprints of the Enterprise IT Systems (EITs) (e.g., ERP System), Functional IT systems (FITs) (e.g., AutoCAD and Primavera Planner), and the Network IT Systems (NITs) (e.g., DUG's portal) ([17]). Once the EA is defined, it can guide the integration of IT systems and should enhance the architecture alignment area.

The EA closely depends on a company's operating model ([19]). An operating model determines the level of business process standardization needed versus the business process integration required. An enterprise can have more than one operating model according to the concerned level. For example, at corporate level the operating model can be different than the business unit level. DUG has mainly two lines of businesses; manufacturing and contracting. This implies that an appropriate operating model for DUG should be diversification. However, the manufacturing line constitutes a small part with very limited needs of IT services in comparison with the contracting business. Therefore, the operating model of DUG at the corporate level is better represented by replication ([19]). However since each individual project at DUG has its own business processes that needs high integration among each other with low standardization. Therefore, the operating model for DUG at the project level is coordination ([19]). Figure 14 shows these operating models of DUG imposed over the chart of possible operating models.

Graph: Figure 14. The two operating models for DUG.

Figure 15 shows the current EA of DUG which has emerged and evolved spontaneously as the company has grown very rapidly. Figure 16 shows a proposed EA at the project level of DUG where the standardization among business processes is low and the integration between the business processes is relatively high (coordination operating model).

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Graph: Figure 15. Current EA for DUG.

Graph: Figure 16. Proposed EA for DUG (project level).

Figure 17 shows a proposed EA at group level of DUG where standardization among business units is relatively high and integration between the business units is relatively low (replication operating model).

Graph: Figure 17. Proposed EA for DUG (group level).

7. Knowledge Management Improved knowledge management should have a positive impact on the "Skills" alignment area. The IT department can act as a knowledge broker ([ 7]) to fix the existing knowledge market pathologies within DUG. Current knowledge market pathologies are monopolies, which exist around the headquarters and the lack of time, which acts as trade barrier because the contracting culture imposes time scarcity and overstretching to meet deadlines. The IT department has already created Communities of Practice for each functional domain and site / subsidiary but still can encourage knowledge sellers to share their knowledge for reputation purpose by dedicating blogs for well-known knowledge sellers across the organization. In addition, a Learning Management System (LMS) should help organize the learning activities and will encourage the self-training among employees.

One key conclusion of [20]) is that IT effectiveness should be a precursor for IT alignment. Avoiding the alignment trap for DUG, in fact, requires investments in IT effectiveness strategies like enterprise architectures and governance. DUG's aggregate alignment profile clearly shows that it is poised for an alignment trap unless it takes appropriate measures to raise the "Architecture" maturity level.

8. Conclusion In this paper, we have presented a survey instrument to assess the IT and business alignment maturity as a key step towards enhancing the performance of an organization by addressing the alignment gaps between IT and business. This instrument is simple, flexible, and is easy-to-deploy. The instrument is based upon the SAMM and relies on unidimensional framework. We have explained how at micro level this instrument applied multiple levels of analysis with minimum assumptions using non-parametric statistical tools. At the macro level, this instrument utilized an aggregation procedure that summarized the alignment maturity level for executives.

As validation, we showed how we customized this instrument to suit the cultural environment of a rapidly growing company where one would expect IT and business misalignment. We illustrated how the instrument provided a multifaceted and rich picture of the alignment issues surrounding the concerned company. We also showed how it was convenient to apply the instrument. In addition, we showed how this application yielded tangible insights into the misalignment. These insights were used to suggest remedies for better alignment between IT and business.

The survey instrument has only been applied to one company so far. However, it can be improved and refined by applications in various companies across industries. The survey probably needs to be customized according to the specific industry of interest.

One surprising result to us was a "second order" misalignment between how the different roles viewed maturity of various attributes of alignment areas. This was evidenced in the high degree of variance around what people believed was the maturity level of fundamental attributes like IT strategic planning, IT investment management, formal assessments and reviews, continuous improvement, sharing of risks and goals, etc. This second-order

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misalignment existed not only between management and staff but also between management and IT management. This dimension and its impact on IT-business alignment in general need further investigation.

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~~~~~~~~ By Mohammed Khaiata and ImranA. Zualkernan

Reported by Author; Author

Mohammed Khaiata is an IT Manager with a large manufacturing company and is responsible for devising and implementing IT Strategy across the group worldwide. He holds an M.Sc. in Information Technology Management from the American University of Sharjah.

Imran A. Zualkernan holds a B.S. and a Ph.D. in Computer Science from the University of Minnesota in Minneapolis, USA. In addition to consulting for fortune 500 companies, he also conducted post-doctoral research at the Carlson School of Management. He has taught at Pennsylvania State University and is currently on the faculty of the American University of Sharjah. He has published over 60 papers in international conferences and journals. He has also been the founding CEO of an offshore software development company and served as the CTO of a multi-national e-Learning company in Singapore.