Page 1 of 19
Advances in Social Sciences Research Journal – Vol. 9, No. 11
Publication Date: November 25, 2022
DOI:10.14738/assrj.911.12920. Mantey, N. O. (2022). Misalignment Between Business and Information Technology(IT) Strategies: Risks Implication for
Johannesburg Stock Exchange Listed Companies. Advances in Social Sciences Research Journal, 9(11). 497-515.
Services for Science and Education – United Kingdom
Misalignment Between Business and Information
Technology(IT) Strategies: Risks Implication for Johannesburg
Stock Exchange Listed Companies
Nicholas Otu Mantey
Wisconsin International University College
School of Business, Accra, Ghana
ABSTRACT
This article examines some aspect of Information Technology (IT) Governance and
highlights potential risks companies can possibly encounter as a result of
misalignment between business and IT strategies. Using a five point- likert scale
questionnaire and a convenient sampling technique, data was collected online from
fifty Chief Information Officers (CIO’s) operating on the Johannesburg Stock
Exchange (JSE). The significance of this study can be viewed from two stand points- managerial and academic. From managerial standpoint this study examines the
impactful consequences of misalignment of Business and IT strategies. From
academic standpoint this study provides cognitive information for advancement of
knowledge in the field of IT Governance research. The findings of this study
revealed that from managerial standpoint there were various risks consequences
associated with misalignment between business and IT strategies, ranging from
management risks, operational dysfunctional of business processes, information
security risks, financial risks, and reputational risks to companies.
Key Words: Misalignment, Strategic alignment, IT Governance, Corporate Governance, IT
security governance, Business strategy, Benchmark, Competitive advantage, IT
infrastructure.
INTRODUCTION
The extensive usage and reliance on Information Technology (IT) by firms has ushered in the
need for companies to develop business-appropriate IT strategies (Business and IT strategies)
in order to achieve corporate goals and competitive advantages (Silva, Figueroa, & Gonzalez- Reinhart 2007). The concept of business and IT strategy alignment (also called strategic
alignment) refers to the degree of congruence, harmony, conformity or fit, between a business
and its IT strategies (Buckby, Best & Stewart 2009; Silva et al. 2007:233). Business and IT
strategic alignment enables Management to ensure that the business and IT goals are aligned
with each other to meet business’ requirements (Silva et al. 2007; Buckby et al. 2009). This is
based on the premise that business and IT objectives should work in harmony with each other
to achieve complete corporate objectives (Silva et al. 2007).
A company’s decisions on IT investment, for example, should take cognisance of the fact that IT
should have justifiable business case and also meet business requirements. In the past, IT was
considered only as an enabler of an organization’s strategy (Baporikar 2014; Buckby et al.
2009; Rusu, Huang, and Rizvi 2008), but is now regarded as an integral part of that strategy
Page 2 of 19
498
Advances in Social Sciences Research Journal (ASSRJ) Vol. 9, Issue 11, November-2022
Services for Science and Education – United Kingdom
(Tucci 2019; Institute of Directors (IOD 2009; Certified information systems auditors (CISA)
review manual (CISA 2011). Consequently, it is logical to recognise that IT should be fully
aligned with business strategies in order to attain overall corporate objectives (IOD 2009). The
concept of alignment between business and IT has been investigated by researchers from
various perspectives and using different constructs, models and frameworks. However, the
subject has not been specifically researched from managerial perspective in the South African
business environment. This is the core motivation for this study.
Additionally, the concept of strategic alignment of business and IT is becoming an increasingly
widely accepted management concept with keen interest from business, control practitioners
and researchers. This interest stems from the fact that companies are now extensively
dependent on IT systems for their operations, and IT has become a pervasive element in
business processes (Tucci 2019; Dehaes & Vangremburgen 2008). In order to achieve harmony
between business and IT strategies, the IT Governance Institute (ITGI 2005) suggests that
companies should implement and develop an IT governance framework as part of a company’s
corporate governance compliance requirements (CISA 2011). From South African perspective,
using IT to effectively and efficiently support business operations will be regarded as partially
fulfilling King III corporate governance requirements (IOD 2009).
This exploratory desk-top study and survey is intended to achieve four objectives namely: (1)
to provide insight into IT Governance with particular reference to misalignment between
Business and IT strategies (2) to highlight possible risks associated with misalignment of
Business and IT strategies, on business operations (3)to examine possible risks impact
associated IT Governance for misalignment of Business and IT strategies, on business
operations.(4)making recommendations to management to address the risks of misalignment
between Business and IT strategies. Two hypotheses, were examined in this study- details are
provided in the analysis section of this article.
Hypothesis
H1: There are managerial and operational risks where a firm’s Business and IT strategies are
misaligned.
H0: There are no managerial and operational risks where a firm’s Business and IT strategies
are misaligned.
H2: There is the need to manage the risks associated IT Governance with regard to
misalignment of Business and IT strategies.
H0: There is no need to manage the risks associated IT Governance with regard to misalignment
of Business and IT strategies.
In conducting this study extensive literature was reviewed globally, although from South
African prospect empirical research on Business and IT strategies is apparently non-existing.
This section examines the literature underpinning this study.
LITERATURE REVIEW
Over the past three decades, there has been significant interest in business and IT strategic
alignment research among academic researchers, control professionals and students Dahlberg
& Kivijarvi 2006; Masa’deh, Hunaiti & Yaseen 2008; Silva, Figueroa, & Gonzalez-Reinhart 2007);
Page 3 of 19
499
Mantey, N. O. (2022). Misalignment Between Business and Information Technology(IT) Strategies: Risks Implication for Johannesburg Stock
Exchange Listed Companies. Advances in Social Sciences Research Journal, 9(11). 497-515.
URL: http://dx.doi.org/10.14738/assrj.911.12920
Bleistein, Cox & Verner 2005; PricewaterhouseCoopers (PwC) & IT Governance Institute
(ITGI)(PwC/ITGI 2006; Tan & Gallupe 2006)
Increasingly, Executive Management and Boards are recognising that IT is now an integral and
pervasive element of commercial business (Ghildyal & Change 2017; Fenwick 2015; Dehaes &
Vangremburgen 2008; CISA 2011; IOD 2009). Consequently, the concept of business and IT
alignment is gaining prominence in business management circles (Masa’deh, Hunaiti & Yaseen
2008). Indeed, the significance of IT and its strategic impact on the success of modern
enterprises is unquestionable (Silva, Figueroa, & Gonzalez-Reinhart 2007); Bleistein, Cox &
Verner 2005; PwC/ITGI 2006). Most enterprises are successfully using IT for competitive
advantage and maximising IT investment (Tan & Gallupe 2006; ITGI 2005; Laudon & Laudon
2016). At this stage it is imperative to discuss certain key concepts in Business and IT
alignment.
WHAT IS BUSINESS AND IT STRATEGIC ALIGNMENT
The concept of business and IT strategic alignment (also known as business -Information
system (IS) alignment, or strategic alignment - (these terms are used interchangeably in
literature) is becoming a top Management issue. One of the key goals of IT governance is to
ensure that there is an alignment between a company’s business requirements and IT
capabilities, performance and sustainability objectives of the business (Symons 2005). This
requires that management establishes appropriate structures and processes around its IT
investments, IT management, IT resources and IT risk. Management should only approve and
fund IT projects which are in alignment with business objectives and that fall within the
broader context of corporate governance principles (Symons 2005). Effective corporate
governance means that it is embedded with IT governance, business and IT alignment, and IT
security requirements (Stallings and Brown 2018) for the attainment of wider corporate
governance framework so that the overall strategic objectives of an enterprise can be achieved.
Webb et al. (2006) is of the opinion that there is an established interrelationship between IT
strategic alignment, IT governance and corporate governance. According to Webb et al. (2006)
IT strategic alignment is one key aspect emanating from IT governance and corporate
governance.
Prior research on business and IT strategic alignment has generated a variety of definitions
which are worth reviewing. Luftman (2001:5) referred to business and IT alignment concept
as “applying IT in an appropriate and timely way, and in harmony with business strategies, and
goals”. Other definitions of business and IT strategic alignment found in literature are: “The
extent to which the IT mission, objectives, and plans support and are supported by their
business counterparts” (Reich & Benbasat in Masa’deh et al.2008:180); “The conformity or fit
between IS and business strategy” (Silva et al. 2007: 232; Byrd et al. 2006:308). Other
definitions of business and IT strategic alignment found in literature are: (1)“The extent to
which the IT mission, objectives, and plans support and are supported by their business
counterparts” (Reich & Benbasat in Masa’deh et al.2008:180);(2)“The conformity or fit
between IS and business strategy” (Silva et al. 2007: 232; Byrd et al. 2006:308);(3)“Strategic
alignment of IT exists when an organization's goals and activities and the information systems
that support them remain in harmony” (Mckeen and Smith 2003);(4) “When all IS activities
provide optimal support for the business goals, objectives, and strategies, then IS and business
[are] in alignment. True alignment implies that the IS strategy and business strategy are