Aligning business and IT strategy is a prominent area of concern. Organizations that successfully align their business strategy and their IT strategy, outperform their non-aligned peers (Chan et al., 1997). This chapter explores the relationship between business strategy, IT strategy and alignment capability. We found that each business strategy can be supported by all IT strategies, but that certain combinations provide a better fit than others.
Regarding business strategy and alignment capability we found no conclusive relationship. Regarding the relationship between IT strategy and alignment capability however a clear relationship appeared.
We explored this relationship further in a dual case study of two organizations having distinctly different IT strategies. One organization sees IT as an enabler for the business processes with mainly an internal impact, whereas the other organization IT sees as a driver for business innovation that can create competitive advantage in the market place. Based upon an assessment of their alignment capabilities we found that the company with the innovative IT strategy scored a distinctly higher alignment capability than the company with the essential IT strategy. Although this conclusion may not be surprising, it provides further evidence for the statement that a more progressive IT strategy pairs with a better alignment of business and IT.