Organizational factors affecting business and information technology alignment: A structural equation modeling analysis

Lack of alignment between business and information technology strategy hinders a firm's business performance and remains one of top 10 concerns of senior executives (Hoffman, IT, business units look for ways to better align their operations, 2004). Many strategic information systems planning methodologies have been proposed to help a firm to close the gap between IT and business strategic planning. These methodologies emphases the formal and rational factors of organizational issues and ignored the actual organizational context and inter group behavior of all stakeholders. The research problem addressed by this study was the lack of alignment of IS/IT strategy with business strategy. The objective of this study was to use an existing theoretical framework (Lee and Pai, organizational mechanisms for successful IS/IT strategic planning in the digital age, 2003) in the context of Taiwan. The purpose of this quantitative research was to apply the same conceptual constructs in the context of firms operating in the western of U.S. A survey of senior IS/IT executives involved in the strategic IT planning was sent to a list of 2805 firms operating in CA, IA, NV, OR, and WA. A sample size of 126 participants had completed the online survey. The structural equation modeling analysis approach was used to validate the research model and test the data. The initial measurement model did not fit well the data. Therefore the model has been modified to remove one of the indicators with low lambda loading for further analysis. The final structural model, using maximum likelihood estimation analysis, confirmed a good fit for the data. The key findings are that the maturity of information systems functions does significantly correlate with the degree of effectiveness of the SISP and the level of task coordination does significantly correlate with the degree of effectiveness of the SISP.