A survey of the extent of alignment of Information and Communication Technology (ICT) strategy to business strategy for companies quoted at the Nairobi Stock Exchange (NSE)

Abstract

It has been argued that most organisations' inability to realise sufficient value from their IT investment is due in part to the absence of strategic alignment. It has also been argued that IT can be a source of sustained competitive advantage for organisations. The keystone of strategic alignment is corporate/business strategy. This means that unless strategic goals are clearly articulated, and well understood throughout the organisation, IT has nothing to align itself with - a cart without a horse. This survey has examined the important issue of information technology and business alignment. It has probed the major factors that influence alignment including organisational structure, technology, planning and communication. It has also focused on the important role played by change management and the need to continually review and adjust alignment. This survey has been focused on companies quoted at the Nairobi Stock Exchange with the aim of finding out the extent of strategic alignment for such companies. The literature review discusses the concept of strategic alignment in addition to different models of strategic alignment that different proponents of the concept have developed over time. In carrying out the survey, a questionnaire was employed as the data collection instrument and was administered to the population of 47 quoted companies out of which 27 responded positively. This translates to a 57 % response rate. Communication focuses on the exchange of ideas, knowledge and information between , IT and the business, enabling both to have a clear understanding of the company's business and IT environments, priorities and what must be done to achieve them. Metrics refers to the use of measures that demonstrate the contribution of IT to the business, in terms that the business understands and accepts. Governance refers to the degree to which the authority of making IT decisions is defined and shared among management and the process managers in both IT and the business apply in setting IT priorities and the allocation of IT resources. Partnership refers to the relationship between the business and IT including IT's involvement in defining business strategies, the degree of trust and how each perceives the contribution of the other. Technology refers to the extent to which IT is able to provide a flexible infrastructure, evaluate and apply emerging technologies, enable or drive business processes and provide customized solutions to meet customer as well as internal needs. Human Resources includes practices such as training, performance feedback, encouraging innovation and providing career opportunities, as well as the IT's function's readiness for change, capability for learning and ability to leverage new ideas. From the study it is clear that companies that are service oriented have made major IT investments. They also have higher scores on the strategic alignment scale. This is explained by the fact that investment in IT for them is a leveraging activity geared towards improving customer service. Therefore they would like to see a strong positive correlation between high level of customer service and IT investment. This then leads them to establishing alignment between the IT function and the business strategy. This in turn has made them frontrunners in working towards strategic alignment. Agriculture and industry based companies have not made as much investment in IT. They have tended to invest more heavily in plant and machinery, which drives their core business. For these companies therefore, focus on strategic alignment has as a result not received adequate attention. In terms of establishing alignment processes, companies have performed well in communication and governance. However they are still lagging behind in partnership as well as metrics