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Investigating the linkage between business objectives and information technology objectives : a multiple case study in the insurance industry

University of British Columbia

This research study used a multiple case methodology to investigate two questions:1) how can the degree of linkage between business and information technology (IT) objectives be measured, and 2) what factors are associated with the attainment of linkage. The linkage within multi-divisional life insurance companies was studied at both the corporate (3 sites) and business unit (10 sites) levels. Linkage was defined as a state in which there is a high level of "mutual understanding between IS and business executives about each others' mission, objectives and plans." It was measured by assessing 1) cross-references between IT and business plans, 2) mutual understanding of current objectives by information systems (IS) and business executives, 3) congruence in long term vision for IT among executives, and 4) subjective assessments of linkage by interviewees. The research model included four factors which would potentially influence linkage: 1) shared knowledge between IS and business executives, 2) previous IT implementation history, 3) frequency of communication between IS and business executives, and 4) connections between IT and business planning processes. The data collection process was designed to enable new factors of interest to emerge from the sites. A total of 57 long, semi-structured interviews were held with 45informants. Written business and IT strategic plans, minutes from IT steering committee meetings, and other strategy documents were collected from each of the three corporate units and the ten business units. Data analysis indicated that both short term and long term linkage existed within the units. Of the four linkage measures, mutual understanding of objectives (by IS and business executives) and congruence in IT vision were found to be the best measures of short and long term linkage, respectively. Data on these measures showed little congruence, indicating that short and long term linkage are two separate dimensions of linkage. In the sample, Corporate IS departments provided services for two major internal clients: the company as a whole (represented by the Chief Executive Officer, and the Senior Vice Presidents of Finance, Corporate Development, and Administration), and the various business units. Corporate-level linkage proved difficult to isolate until linkage between corporate IT and corporate business objectives was separated from linkage between corporate IT and business unit objectives. Two of the three companies were successful in achieving the first type of linkage, none was successful in achieving the latter. No long term vision for the future of IT within the company was present in any of the three corporate sites. Linkage between corporate IT and corporate business objectives was associated with: 1) the presence of written corporate objectives, 2) shared beliefs about the value of IT, 3) communication between IS and business executives, and 4) CEO involvement in IT management. Linkage between corporate IT objectives and business unit objectives was uniformly low in the sample companies and was associated with: 1) very low levels of communication between corporate IS and business unit executives, 2) a disagreement about the nature of linkage and 3) a "double-bind" for corporate IS departments in which the technology leadership requested by business unit executives was resisted by them when it was provided. It appears likely that the tension between corporate IS and business units could provide positive benefits if managed appropriately. However, it may be unrealistic to expect corporate IT objectives to exhibit high levels of linkage simultaneously with both corporate objectives and BU objectives since actions taken to improve one aspect of linkage seemed to reduce the other. Within the ten business units, there was a wide variance in achieved levels of linkage, both long and short term. The factors which seemed to influence the level of linkage attained were: 1) shared knowledge between IS and business executives, 2) a successful IT implementation history, 3) shared beliefs about the value of IT, and 4) communication between IS and business executives. Findings from this study must be interpreted cautiously, not only because of the small sample size, but also because of the factors present in the insurance industry during the time of data collection. This industry, for the first time in several decades, was under stress. Margins were being eroded, profits were decreasing, and many of the traditional business practices were under review. In a more stable industry, the relationships between the factors and linkage might have been different. This study separated factors into antecedents (shared knowledge, IT implementation history) and current practices (communication and connections in planning). An important outcome was the emergence of several other influential antecedents (e.g. shared beliefs, double binds) and the finding that antecedents seemed to strongly influence communication which, in turn, influenced both measures of linkage: mutual understanding and vision for IT. These findings suggest that both practitioners and researchers should reposition their work away from the technical aspects of IT planning and organizational interventions (e.g. IT steering committees) and towards the longer term issue of creating shared knowledge and shared beliefs between business and IS executives in organizations.

Thesis/Dissertation

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2008-09-17

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http://hdl.handle.net/2429/2115

Business Administration

University of British Columbia

UBCV

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