JOnline: The Development of a Shared CIO/Executive Management Understanding and Its Impact on Information Systems Strategic Alignment 

 
Download Article

Information systems strategic alignment has been noted as one of the top concerns of the chief information officer (CIO) and executive management of organizations.1 The executive management includes the chief executive officer (CEO) and top business executives within the organization who report directly to the CEO. IS strategic alignment is defined in this study as the alignment of the business strategy and the IS strategy within the organization. IS strategic alignment is of particular importance since it has been shown to influence the financial performance of organizations.2 However, even though CIOs and top business executives often recognize the benefits of IS strategic alignment, they do not necessarily understand how to create this alignment.

Previous research has indicated that the working relationship between the CIO and executive management is key to facilitating IS strategic alignment in the organization; however, this relationship has proven to be a troubled one. The lack of a common understanding between the CIO and executive management regarding the role of IS within the organization has been attributed to the breach in this relationship. CIOs often do not understand the principles of the organization’s business, while executive management members often do not understand the capabilities of IS.3 Therefore, this article focuses on:

  • The influence of a shared CIO/executive management understanding about the role of IS strategic alignment in the organization
  • Factors that lead to the development of a shared CIO/executive management understanding about the role of IS in the organization

This article examines how a shared understanding between the CIO and executive management regarding the role of IS within the organization directly influences IS strategic alignment within the organization, as well as how three primary factors lead to the development of this shared understanding. The following sections support the relationships discussed in the research model.

Influence of Shared CIO/Executive Management Understanding on IS Strategic Alignment

Previous studies have suggested that a shared CIO/executive management understanding is an essential element leading to IS strategic alignment within the organization. Shared understanding between the CIO and executive management is expected to allow the CIO to influence the business strategy, allow the CIO and executive management to reach common organizational goals and objectives through better organizational planning, and facilitate the alignment of the organization’s IS strategy with its business strategy.4 Therefore, higher levels of a shared CIO/executive management understanding regarding the role of IS within the organization are posited to influence the alignment between the IS and business strategies of the firm.

Influence of Primary Factors on Shared CIO/Executive Management Understanding

Three primary factors facilitate the development of a shared CIO/executive management understanding:

  • Formal position of the CIO within the organization
  • CIO educational efforts
  • Shared CIO/executive management language

Formal CIO Position

There are two indicators of the CIO’s formal position within the organization: the hierarchical level of the CIO and formal membership of the CIO in the executive management. It is essential for the CIO to either directly report to the CEO or be a formal executive management member for the CIO to be successful in the organization and enable IS strategic alignment.5 CIOs who report directly to the CEO and are formal executive management members have greater opportunities to communicate with the executive management and build an understanding of the organization’s business practices.6 Therefore, greater opportunity for engagements, due to the formal position of the CIO, allow for a greater degree of knowledge exchange and the development of a shared CIO/executive management understanding.

CIO Educational Efforts

The CIO must make proactive efforts to educate executive management about the capabilities of IS, since this group of business executives often has limited knowledge about the true capabilities of IS. The CIO needs to take an assertive stance to transfer knowledge (from his/her area of expertise in IS) to the executive management to promote a shared understanding with these organizational leaders. The CIO can personally educate executive management members via the following mechanisms:

  • Share information with the executive management regarding the capabilities of IS
  • Work to improve the IS literacy of executive management
  • Provide insight into emerging opportunities for IS
  • Provide realistic expectations to executive management regarding the capabilities of IS
  • Manage executive management’s expectations regarding the capabilities of IS

In addition, the CIO can organize seminars, presentations, workshops or retreats to facilitate the development of a shared CIO/executive management understanding.7

Shared CIO/Executive Management Language

There is evidence that a shared CIO/executive management language promotes a shared understanding between the CIO and executive management regarding the role of IS within the organization. The creation of a shared understanding is unlikely without the existence of a common shared language used to exchange knowledge and communicate meaning.8 CIOs who cannot speak adeptly in “business language” or who use “technolingo” tend to alienate the executive management members who are the key decision makers within the firm.9 Therefore, a shared CIO/executive management language influences the development of a shared CIO/executive management understanding regarding the role of IS in the organization.

Data Collection and Analysis

Two survey instruments were used to collect data for this study and resulting article: a CIO survey and an executive management member survey. Data collection was conducted in the second and third quarters of 2004 and employed a dual-stage matched sampling strategy. A primary questionnaire (CIO survey) was first sent to the CIO. For those organizations from which a completed CIO instrument was received and the CIO chose to provide the organization’s identity, an executive management survey was sent to the corresponding executive management members of that organization. A total of 126 organizations returned the CIO survey and at least one corresponding executive management member survey. In several organizations, responses were obtained from multiple executive management members. These organizations represent a wide range of industries and include a total of 123 US firms, two Canadian firms and one European firm. The research model (Figure 1) was tested using a partial least-squares approach through PLS Graph, which is a structural equation modeling tool. All relationships were found to be statistically significant (0.05 level of significance) as shown in Figure 1.

Figure 1

Results and Discussion

In the research model, the influence of a shared CIO/executive management understanding on IS strategic alignment within the organization is examined. These findings suggest that the CIO and senior executives within the organization directly influence the degree of IS alignment within the organization. IS strategic alignment is a complex phenomenon that is likely to be influenced by numerous factors. Due to the need to provide a concise research model, not all potential variables that may contribute to IS strategic alignment were investigated. However, the results of this study strongly indicate that a shared CIO/executive management understanding influences the development of IS strategic alignment within the organization. In addition, the results indicate that the following three factors were found to influence a shared CIO/executive management understanding regarding the role of IS within the organization:

  • A formal CIO position
  • CIO educational efforts
  • A shared CIO/executive management language

Therefore, the results suggest that these factors also indirectly influence IS strategic alignment within the organization via the development of a shared CIO/executive management understanding.

The degree of the CIO’s formal executive management membership and the reporting level of the CIO within the organization’s hierarchy promote a shared understanding between the CIO and executive management. These findings provide interesting implications for the organization. The executive management, particularly the CEO, can directly control the reporting level and the degree of formal participation of the CIO with the executive management. To promote a shared CIO/executive management understanding, the CEO can have the CIO report directly to him/her and make the CIO a formal member of the executive management. In addition, the CIO can lobby the CEO and executive management to include this top-ranking IS executive as a formal executive management member reporting directly to the CEO. By controlling the reporting structure of the CIO and the membership of the executive management, the organization has the ability to directly promote the development of a shared understanding between the CIO and executive management.

The findings also provide insights into which educational efforts influence a shared understanding. Specifically, organizing seminars and providing realistic expectations to executive management about the capabilities of IS are effective educational endeavors. Therefore, the CIO should focus on organizing seminars on a routine basis to increase executive management’s IS knowledge to forge a shared CIO/executive management understanding regarding the role of IS within the organization. In addition, the CIO must consistently work to provide executive management with realistic expectations of the capabilities of IS. If the CIO allows executive management to understand how IS can realistically be used within the firm to meet specific objectives, the CIO and executive management will be better able to reach a mutual understanding regarding the role IS plays within their organization.

The results also indicate that a shared CIO/executive management language promotes the development of a common understanding between the top IS executive and the highest echelon of business leaders within the organization. Thus, CIOs can proactively avoid using technical jargon and explain issues in business terms to promote a shared understanding with the executive management with regard to the role of IS within the organization. These findings also suggest that a shared CIO/executive management language can have an indirect impact on IS strategic alignment if the CIO and executive management are able to take advantage of their common language to develop a shared understanding regarding the role of IS within the organization.

Conclusions

The results of this study provide important levers to CIOs and top management to foster a shared understanding. The leadership of the organization can directly control the primary factors that lead to a shared CIO/executive management understanding. Based on the findings, senior leadership should engineer the structure of the organization so that the CIO is a formal executive management member who reports directly to the CEO. The CIO can organize seminars to increase the IS knowledge of the executive management and focus on providing realistic expectations of the capabilities of IS. In addition, executive management can support the need for educational events through corporate directives. Results support the important role shared language plays in creating a common understanding. In summary, the practical guidelines derived from the study, which provide the CIO and executive management levers in terms of promoting a shared CIO/executive management understanding and IS strategic alignment, are:

  • The CIO directly reports to the CEO.
  • The CIO is a formal member of executive management.
  • The CIO organizes seminars to educate executive management on the capabilities of IS.
  • The CIO sets realistic expectations with respect to the role of IS in the organization.
  • The CIO uses a shared language with executive management to forge a common understanding with regard to the role of IS within the organization.
  • A shared CIO/executive management understanding of the role of IS within the organization is key to the development of IS strategic alignment.

In conclusion, a shared CIO/executive management understanding positively influences IS strategic alignment within the organization. Given the undeniable reality that IS often contributes strategically to the business, such research has value for organizations in all industries.

Endnotes

1 Chan, Yolande; Sid Huff, et al.; “Business Strategic Orientation, Information Systems, Strategic Orientation, and Strategic Alignment,” Information Systems Research 8(2): 125-151, 1997. Reich, Blaize; Izak Benbasat; “Factors That Influence the Social Dimensions of Alignment Between Business and Information Technology Objectives,” MIS Quarterly, 24(1): 81-114, 2000. Chan, Yolande; “Why Haven’t We Mastered Alignment? The Importance of the Informal Organization Structure,” MIS Quarterly Executive, 1(2): 97-112, 2002.

2 Ibid. Sabherwal, Rajiv; Yolande Chan; “Alignment Between Business and IS Strategies: A Study of Prospectors, Analyzers, and Defenders,” Information Systems Research, 12(1): 11-34, 2001.

3 Feeny, David; Brian Edwards, et al.; “Understanding the CEO/CIO Relationship,” MIS Quarterly, 16(4): 435-449, 1992. Armstrong, Curtis; V. Sambamurthy; “Information Technology Assimilation in Firms: The Influence of Senior Leadership and IT Infrastructures,” Information Systems Research, 10(4): 304-328, 1999.

4 Keen, Peter; Shaping the Future, Harvard Business School Press, Boston, Massachusetts, USA, 1991. Karimi, Jahangir; Yash Gupta; “The Congruence Between a Firm’s Competitive Strategy and Information Technology Leader’s Rank and Role,” Journal of Management Information Systems, 13(1): 63-89, 1996.

5 Op. cit., Feeney, Edwards et al

6 Earl, Michael; David Feeny; “Is Your CIO Adding Value?” Sloan Management Review, 35(3): 11-21, 1994. Op. cit., Armstrong, Sambamurthy.

7 Lederer, Albert; Aubrey Mendelow; “Information Resource Planning: Overcoming Difficulties in Identifying Top Management’s Objectives,” MIS Quarterly, 11(3): 388-400, 1987

8 Nahapiet, Janine; Sumantra Ghoshal; “Social Capital, Intellectual Capital, and the Organizational Advantage,” Academy of Management Review, 23(2): 242-266, 1998

9 Hambrick, Donald; Phyllis Mason; “Upper Echelons: The Organization as a Reflection of Its Top Managers,” Academy of Management Review, 9(1): 193-206, 1984. Finkelstein, Sydney; Donald Hambrick; Strategic Leadership: Top Executives and Their Effects on Organizations, West Publishing Company, Minneapolis, Minnesota, USA, 1996.

David Preston, Ph.D.
is an assistant professor of information systems at Texas Christian University, Fort Worth, Texas, USA. His research interests include IS leadership, CIO research, IS strategy and alignment, and IS outsourcing. He has work experience as an engineer, project manager and management consultant. His work has been published in the Journal of Logistics Information Management and the Journal of Information Science and Technology.

Elena Karahanna, Ph.D.
is an associate professor of management information systems at the University of Georgia, Athens, Georgia, USA. Her research interests include the adoption and implementation of IS, the effect of media choice and use on individuals and organizations, cross-cultural issues and IS leadership. Her work has been published in top IS journals including Management Science, Organization Science and MIS Quarterly.


Information Systems Control Journal, formerly the IS Audit & Control Journal, is published by ISACA®, Inc.. Membership in the association, a voluntary organization of persons interested in information systems (IS) auditing, control and security, entitles one to receive an annual subscription to the Information Systems Control Journal.

Opinions expressed in the Information Systems Control Journal represent the views of the authors and advertisers. They may differ from policies and official statements of ISACA® and/or the IT Governance Institute® and their committees, and from opinions endorsed by authors' employers, or the editors of this Journal. Information Systems Control Journal does not attest to the originality of authors' content.

© Copyright 2005 by ISACA® Inc., formerly the EDP Auditors Association. All rights res erved. ISCATM Information Systems Control AssociationTM

Instructors are permitted to photocopy isolated articles for noncommercial classroom use without fee. For other copying, reprint or republication, permission must be obtained in writing from the association. Where necessary, permission is granted by the copyright owners for those registered with the Copyright Clearance Center (CCC), 27 Congress St., Salem, Mass. 01970, to photocopy articles owned by ISACA® Inc., for a flat fee of US $2.50 per article plus 25¢ per page. Send payment to the CCC stating the ISSN (1526-7407), date, volume, and first and last page number of each article. Copying for other than personal use or internal reference, or of articles or columns not owned by the association without express permission of the association or the copyright owner is expressly prohibited.

www.isaca.org

INFORMATION SYSTEMS CONTROL JOURNAL, VOLUME 3, 2005