Assessing business and information technology alignment : a study of listed companies in South Africa

Abstract

Business and Information Technology Alignment (BITA) remains an important concern for business and IT executives. Empirical studies have demonstrated the necessity of a tight coupling between business and IT performance, indicating that the lack of cohesive business and IT strategies may negatively impact Organisational Performance (OP). The strategic implementation of BITA is posited to foster innovation and efficiency, resulting in increased customer satisfaction, enhanced decision-making processes, and optimised business process automation. This research addresses this relation by assessing BITA maturity and evaluating its relationship with OP within 166 Johannesburg Stock Exchange-listed companies in South Africa. A theoretical model rooted in IT and business strategies is adopted to do this, utilising the Strategic Alignment Maturity Method (SAMM) as the BITA measurement instrument. An additional aim is to investigate the applicability of SAMM in an emerging economy. Quantitative methods were used to investigate the relationship between the alignment of business and IT management to performance. Data pertinent to BITA was collected by questionnaire survey from business and IT executives and via the SAMM framework linked to the operating performance of the companies surveyed. Various financial measures collected from secondary sources are used as a proxy for operating performance. The data were analysed using descriptive statistics, Weighted Least Squares regression and General Linear Model regression in SPSS. The measurement of BITA was found to involve a considerable degree of subjectivity, raising concerns about the roles of the respondents, IT and business executives, in completing the questionnaire to assess BITA. Model fit challenges were encountered within the OP factor models, likely attributable to the subjectivity of variables used in the modelling and the timing of the dependent measures of the operating measures. The overall BITA maturity of JSE-listed companies was found to be higher than that of companies in China, the United States and globally, although with similar variations, rendering the BITA results generally consistent with previous surveys. However, the study found no strong evidence that BITA enhances OP using the SAMM, thereby casting doubts about the SAMM's suitability for measuring BITA in the context of a BRICS emerging economy, specifically South Africa. This shortcoming may be attributed to applying a Western framework to a different cultural context and stage of national development. It suggests the potential necessity for refining the SAMM to incorporate additional stakeholders and cultural factors. Additionally, issues with the input data, such as the survey methodology validity concerns, including the concurrent measurement of OP, which ideally requires a one-year lag, may further contribute to this limitation. The study does make a valuable contribution to the literature, particularly in identifying the determinants that drive BITA implementation in emerging economies like South Africa. The work enhances the theoretical foundation by grounding the conceptual framework within the existing BITA literature and addresses the dearth of research concerning the relationship between BITA maturity and OP within listed companies in emerging economies. Additionally, the study offers practical insights by providing recommendations to assist managers and practitioners in achieving and sustaining long-term alignment of business and technology functions.