Approaches to strategic alignment of business and information systems: A study on application service acquisitions

Purpose Technology-related issues have an increasing impact on business. The alignment between overall business objectives and technology-related decisions, such as decisions on application service acquisitions, resurfaces occasionally in the intense academic discussion on information systems (IS). Prior research indicates that the alignment of business and IS decisions remains a major concern for business practitioners. The purpose of this paper is to analyze the factors that drive the consistency in technology-related decisions and result in diverse modes of business-IS alignment. Design/methodology/approach This study investigates application service acquisitions among the top 200 firms in Finland. In this quantitative empirical study, principal component analysis with varimax rotation method is used to examine the companies' drivers for business-IS alignment. Moreover, the firms are categorized using the cluster analysis method. Findings This study identifies four factors that drive the achievement of business-IS alignment. These factors are: awareness of the impact and risks of IS decisions, efficacy of IS management, systematic decision making process, and business development orientation of IS management. Moreover, the study identifies four clusters of firms that illustrate diverse modes of business-IS alignment: ad-hoc alignment, business-driven alignment, consensual alignment, and technology-driven alignment. Originality/value The value of the study lies in revealing the key factors influencing the alignment of vital IS investments and the overall business strategy. The study identifies four clearly different approaches to business-IS alignment. Moreover, the paper suggests that business-IS alignment stems from several factors, including the collective development of strategies that reflect the combined knowledge of business and IS managers