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Striving towards
strategic alignment in SMEs:
an empirical analysis
Adarsh Garg

Strategic
alignment
in SMEs
77

IT Department, Institute of Management and Research, Ghaziabad, India, and

D.P. Goyal
Information Systems Department, Management Development Institute,
Gurgoan, India

Received 17 August 2011

Revised 9 December 2011
Accepted 9 December 2012

Abstract
Purpose Despite general awareness and acceptance of the benefit of strategic planning/alignment
of IS strategy with business strategy, few efforts have been made to define and study the relationship.
A review of literature has revealed that past studies have largely neglected the specific consideration
of small to medium-sized enterprises (SMEs) especially IT/software developing SMEs in India. The
purpose of this research is to investigate the prevalence of strategic planning activity in Indian IT
SMEs and its decisive influence on business performance.
Design/methodology/approach A survey-based approach was adopted to understand the
prevalence of strategic planning activity in Indian IT SMEs and its crucial influence on business
performance at all three levels of management. A short survey instrument was designed by reviewing
the literature on strategic planning activity in software developing SMEs. A sample of 23 software
developing SMEs in India was used.
Findings A response rate of 88.8 per cent was achieved and included respondents at senior
management, middle management, and lower level management across the software developing SMEs
in India. The results indicate that the alignment of IS/IT strategy with corporate strategy has
significant effect on performance of IT SMEs besides the general awareness of importance of strategic
alignment in SMEs at all three levels of management.
Research limitations/implications The limited number of software developing SMEs will affect
the generalizability of the study to the entire SME population. To negate the limitations of this study,
multiple multi-level case studies will be conducted in SMEs in the next phase of research. This
research would contribute by indicating some of the implications, for both decision makers and
academia, of an extended IT capabilities viewpoint on strategic planning activity. Future study should
focus on performing a global survey on strategic alignment practices in SMEs.
Originality/value The novelty of the paper lies in conducting a comparative study on the strategic
alignment practices at all three levels of management in Indian SMEs and measuring its impact on the
performance of the firm.
Keywords IT, SME, Strategic alignment, Performance, India, Small to medium-sized enterprises,
Information technology
Paper type Research paper

1. Introduction
The role of information systems (ISs) has changed over a period of time with demands
of dynamic business scenario. The main focus of using IS is to obtain maximum
payback for agility and flexibility. As IS success is significant for organizational
flexibility, it has become more significant to study IS success and its factors. The issue
of IS success has been taken from three viewpoints, i.e. IS perspective, organizational
perspective and user perspective as shown in Figure 1. IS perspective takes the issues
related to IS maturity; IS flexibility, quality of information it provides, use of IS in

Journal of Advances in Management

Research
Vol. 9 No. 1, 2012
pp. 77-95
r Emerald Group Publishing Limited
0972-7981
DOI 10.1108/09727981211225662

JAMR
9,1

User perspective
User satisfaction

Personal performance

IS flexibility

IS maturity

IS perspective

78

Information quality

User
involvement

Figure 1.
IS success/effectiveness
factors

Impact of organization

IS success

SPIS

Business perspective

business processes while organizational perspective takes strategic planning of IS,

impact of organization, whereas user perspective focuses on user involvement in the
process of IS planning, user satisfaction and personal performance of user while using
IS. ISs tend to be unsuccessful most of the time despite the fact that organizations are
investing heavily on procuring ISs. The reasons sought are a lack of alignment
between IS planning and business planning, huge divergence in the approaches
adopted by different types of enterprises, while developing ISs due to time, cost and
environmental factors, ignoring IS project management activity. The evidence of the
factors affecting success of ISs is noticeable in the literature (Adarsh et al., 2008, 2012).
Academics and researchers have, time and again, considered strategic planning of ISs
as a significant issue facing IT managers (Aladwani, 2000) because of the increased
investment in ISs and the growing strategic impact of ISs on business (Bai and Lee,
2003). ISs need the ability to adapt to new situations as many times organizations face
IS failure due to inflexibility in managing new situations. To cope with a dynamically
changing business environment, organizations have to develop a methodology for IS
strategic planning. Organizations look for flexibility to adapt quickly to environmental
changes and thereby gain an advantage over their competitors (Leana and Barry, 2000).
Consequently, IS researchers and practitioners have started recognizing the importance
of flexibility in ISs (Byrd and Turner, 2000; Duncan, 1995). The concept of strategic
alignment (IS planning aligned with business planning) has been in use for many years
and perennially one of the top ten issues facing corporate top managers and IS
executives (Brancheau et al., 1996; Watson et al., 1997; Gottschalk, 2001). Organizations
typically achieve strategic alignment by passing through three levels, i.e. awareness,

integration and alignment (Chan et al., 1997). The importance of aligning the ISs
function with other business functions is widely recognized and has been documented
since the late 1980s (Brancheau and Wetherbe, 1987; Dixon and John, 1989a, b; Earl,
1993; Daniels, 1994; Neiderman et al., 1991; Weill and Baroudi, 1990; Adarsh et al.,
2012). Empirical studies have found IS strategic alignment influences business
performance (Henderson and Venkatraman, 1993; OECD, 2004; Adarsh et al., 2008).
1.1 IS planning in small- to medium-sized enterprises (SMEs)
IS is one of the main issues for SME in their routine functional activities and it has
become critical in SME as technology now plays a more central role. This advocates the
need to plan IS according to business needs (Blili and Raymond, 1993). The IS role
must imitate the functional activities of business and organizations must align IS
planning with business strategy (Premkumar, 1992). Frequent changes take place in
business processes due to dynamic business scenario, various changes that take place
in an organization must be considered in IS planning process (Levy and Powell, 2000).
Table I shows the study of SMEs by various researchers.
The ISs is effective only if IS development is aligned with the business system
development strategy (Brumec, 1998; Hammer and Champy, 1994; Segars and Grover,
1998; Jouirou and Kalika, 2004) which, in fact, influences business performance
(Henderson and Venkatraman, 1993; OECD, 2004) as shown in Figure 2.
The issue of IS alignment has been studied in depth. However, limited research has
been done in the area of strategic planning of IS especially in SMEs. Before exploring
the extent of strategic planning/alignment and its effect on organizational performance
in software SMEs, there is a concise explanation of IT industry and strategic planning/
alignment process and definition of SMEs in India.

Author

Issues addressed

Burn and Szeto (2000)

Blili and Raymond
(1993)
Sohal and Lionel
(1993)
Fink (1998)

Studied strategic use of IT

IS planning is critical due to centralization of technology in the organizations

Palvia and Palvia

(1999)
Poon and Swatman
(1999)
Seyal et al. (2000)
Levy and Powell
(2000)
Love and Irani (2004)
Sharma and Bhagwat
(2005)
Adarsh et al. (2008,
2012)
Almajali and Dahalin
(2011)

Strategic
alignment
in SMEs
79

IT usage is positively related to organizational performance by maximizing

the role of IT in organizational strategy
Studied ten IT adoption factors, analysed the significance of organizational
culture, internal resources and appropriate procedures
Identified manager/owner factors, user training, S/W maintenance,
documentation and vendor support as key areas of IT dissatisfaction
No strategy to integrate internal business applications and internet
Managers must have technical knowledge
Developed an approach that reflects IS strategy must echo organizational
change
Evaluated IT and its benefits in IS planning
Formal practices of IS are yet to be implemented to get maximum benefit of IS
Lower-level management is not aware of the Strategic alignment activity in
the organizations
Evaluated successful IT implementation as one of the factors of strategic
alignment success

Table I.
IS planning and SME

JAMR
9,1

80

1.2 Overview of IT industry

The awesome growth in the Indian information technology sector in past decades has
had a huge multiplier effect on national income and employment generation as well as
on the increase of many ancillary industries.
1.2.1 Industry structure. The Indian IT industry is segmented into IT services, ITeSBPO, engineering services and R&D, software products and hardware. The overall
growth rate of these segments is 27.8 per cent. Table II shows a segregated view of the
revenue of each segment of the IT industry, from 2004 to 2010. According to
NASSCOM strategic review 2007, 2008, 2009, 2010, the Indian IT-BPO industry would
grow at a CAGR of 25 per cent and exports of about US$88.1 billion by 2011.
A changing global business scenario, liberalization of Indian economic policy and
outsourcing trend are key drivers for growth in the Indian IT industry. Indian IT-ITeS
industry foresees a quantum growth over the next couple of years, focusing on better
productivity and operation rates and thus improving the value chain. In the growing
globalization trend, many Indian IT companies have started looking China as a
promising destination.

IS aligned with
organizational goals

Business strategy
IS development

Organizational
performance

Figure 2.
IS alignment with
organizational goals

Table II.
Indian IT industry
segmental revenue
(2004-2010) in US$billion

Long-term
effectiveness

Alignment

IT/IS strategy

Organizational
structure

Segments

FY04 FY05 FY06 FY07 FY08 FY09 FY10

FY11(Est.)

IT services
IteS-BPO
Engineering services and R&D,
software products
Total software and services revenue
Hardware
Total IT industry

10.4
3.4

13.5
5.2

17.8
7.2

23.7
9.5

31.0
12.5

35.2
14.8

39
14.1

47.1
17.3

2.9
16.7
5.0
21.6

3.9
22.6
5.9
28.4

5.3
30.3
7.0
37.4

6.5
39.7
8.2
47.8

8.6
52.0
12.0
64.0

9.5
59.6
12.1
71.7

10
63.7
9.4
73.1

11.7
76.1
12.0
88.1

1.2.2 Definition of SMEs. The definition of SMEs varies from country to country and
the numbers of employees or capital investment or both have been used as criteria for
defining SMEs across the world (Ghose, 2001). In India, according to Micro, Small and
Medium Enterprise Act, 2006 (MSMED) enterprises are classified broadly into two
sections, i.e. enterprises either manufacture goods or provide services. Further
classification is done under these two sections as shown in Table III.
1.2.3 SMEs in IT industry. Thriving domestic and export markets and growing
opportunities are some of the major factors that contributed to the establishment of
SMEs in the IT sector since 2000. SMEs play a crucial role in driving economic growth
in developing countries as well as in developed ones. They account for more than
15 per cent of Indias GDP, 35 per cent of Indias total exports, 95 per cent of total
industrial units, 40 per cent of Indias industrial output and provide direct employment
to 29.5 million people. In India IT SMEs are segmented in terms of turnover. In total,
40 per cent of the total companies from north operate with turnovers between oRs 10
million upto Rs 50 million, respectively. In total, 53 per cent of the SMEs in the southern
region have turnovers in the range of Rs 10-50 million. A total of 50 per cent companies
in the eastern region fall in the turnover range of oRs 10 million. In the western
region, 55 per cent companies fall in the bracket of Rs 10-50 million.
A major chunk of revenue for the Indian IT industry is earned from exports;
however, a contrary trend is noticeable in the case of SMEs in this segment. IT SMEs
obtain the maximum of their revenue (65 per cent) from the domestic market with only
35 per cent of revenue coming from exports. Furthermore, the majority of the exports
are to the Asia Pacific region. The IT industry seems to be the fastest growing sector in
the country over the last couple of years and SMEs play a significant role in driving the
Indian IT industry to new heights by sustaining the current growth. The Indian SMEs
have been consistently outperforming large industry on key parameters such as
growth in production and growth in employment.
Considering the IS planning as one of the major issues of concern in IS success as
well as organizational flexibility and limited research in SME service industry this
research investigates the prevalence of strategic planning activity in IT SMEs and its
decisive influence on business performance.

Strategic
alignment
in SMEs
81

2. Research objectives and hypotheses

We attempted to survey software developing/IT SMEs:
(1) to explore the prevalence of strategic planning activity in IT SMEs; and
(2)

to study the deviation of perception of strategic planning between different

groups of respondents (at three levels of management and IT and non-IT).

Size of enterprise

Investment limits in Rs
Manufacturing (plant and machinery only)

Service (equipment only)

MICRO
SMALL
MEDIUM

Up to 25 lakhs
From 25 lakhs to 5 crores
From 5 crores to 10 crores

Up to 10 lakhs
From 10 lakhs to 2 crores
From 2 crores to 5 crores

Source: National Small Industries Corporation (NSIC) (2002)

Table III.
Definition of
SMEs in India

JAMR
9,1

To answer our research question, several research hypotheses are proposed:

H1. Business strength positively influences strategic planning of IS.
H2. Business scope influences strategic planning of IS.

82

H3. Key strategic issues positively effect strategic planning of IS.

H4. Feasibility of the business planning has positive relation with strategic
planning of IS.
H5. Business environment positively influences strategic planning of IS.
H6. IT and non-IT executives differ in their opinion about influence of business
environment on strategic planning of IS.
H7. Different levels of management have different perception on influence of factors
on strategic planning of IS.
3. Research scope
The organizations selected for the study were software SMEs of IT industry with head
offices located in National Capital Region. Organizations were defined according to
total annual turnover and number of employees. In each organization levels of
associates, i.e. top-level managers, middle-level managers and lower-level associates
were taken. Strategic-level executives included IT professional also. Overall 23
companies participated in this study. Since all were IT companies, they were largely
studied to understand the range of services offered by them, market (domestic and
international), diversification to verticals and turnover.
All the participant companies operate in software products besides a few operating
in IT services, hardware and ITeS-BPO. It was mandatory for each participating
company to offer software products to contribute in this study. Most of the
participating companies cater to the domestic market with a few to the international
market also. The visibility of accreditation with quality certifications is varying in
different companies.
Companies offer different products and services, among which custom application
development is the most prevalent service. The participating companies vary in the
verticals which include banking and financial services, manufacturing, retail and
distribution, media and entertainment, healthcare and life sciences, construction
and infrastructure, energy and utilities, government and defence, telecom, logistics and
travel and tourism.
4. Research methodology
4.1 Design of the questionnaire
A questionnaire-cum-interview methodology was used for the survey, thus a
questionnaire was designed. The questionnaire named best practices questionnaire
(BPQ) was designed on the basis of literature survey and input from academia. The
questionnaire was first pre-tested on 22 management and IT professionals fromthe
actual sample of respondents for checking its reliability and content validity.

The pre-tested and modified questionnaire was arranged in two sets SET-I and SET-II.
The detail of SET-I is discussed as it relates to the current research paper.
4.1.1 BPQ SET-I strategic alignment of ISs. In total, 55 items were identified
including the general information about the respondents as well as the organization
and framed in the form of questionnaire SET-I. These items were identified for
strategic alignment of IS, on the basis of literature study and input from the
practitioners during pre-testing of the questionnaires. All 55 items were put in different
sub-headings of the questionnaire SET-I. The sub-headings are as follows:
(1)

strategic planning in the organization;

(2)

usage of IT/IS in the organization;

(3)

influence of IT/IS usage on organization; and

(4)

IT/IS planning.

Strategic
alignment
in SMEs
83

4.2 Testing of the questionnaire

The questionnaires were tested for their reliability, content validity and scale
sensitivity before they were finalized and framed in two sets, i.e. BPQ SET-I and BPQ
SET-II. The testing of the questionnaire was carried out as follows.
4.2.1 Reliability. Cronbachs a test was applied to check the reliability of the scale
and the value of the coefficient was more than 0.7 in all the components of the
questionnaire sets thus indicating the goodness of scale measurement. Details are
given in Table IV.
4.2.2 Content validity. A total of 22 respondents from the actual sample test
administered using the questionnaire-cum-interview method. Detailed discussion was
done with five executives. The questionnaire was tested for the intensity of the study
reflected by the variables taken in the questionnaire for the study in hand, relevance of
the topic keeping current business scenario in mind and response time of the
respondents.
Observation and feedback of the respondents. It took almost 25-35 minutes for each
respondent to furnish the details enquired in the questionnaires. On average the
questionnaire was found comprehensive and the topic of the research was found
appropriate considering the importance of SMEs in the current business environment.
A few of the suggestions given are shown below:
(1)
(2)
(3)

It was suggested to sub-categorize the questionnaire SET-II (not used for this
paper) for the ease of understanding.
Use of IT/IS instead of only IS wherever written in the questionnaire.
The extent of usage if IT/IS was found to be important for its inclusion in
SET-I.

Appropriate changes were incorporated in the questionnaires.

Sl. no.

Components

1
2
3
4

Strategic planning
Usage of IT/IS
Influence of IT/IS usage on organization
IT/IS planning

Items

Cronbachs a

25
8
9
9

0.851
0.789
0.742
0.776

Table IV.
Scale reliability of the
survey tool (Cronbachs a)

JAMR
9,1

84

4.2.3 Sensitivity of scale measurement. In general a five-point Likert scale was used.
Some questions were asked more than once with a similar theme but with different
ways to cross-check the subject. In some cases questions were asked on a yes and no
scale depending upon the possibility of responses.
The research procedure which is followed in the study is outlined in Figure 3. The
questionnaires were administered to collect the primary data. For the purpose of
having an insight into organization strategy process questionnaire SET-I was
administered to strategic-level managers which included IT professionals also. Most of
the respondents at this level were interviewed as they felt more comfortable giving
verbal answers.
5. Result and discussion
The data collected from the selected organizations has been analysed to know if there
exists any IS alignment with organizational goals in SMEs or not. Factors were
extracted for business strategy components and IS strategy components for reducing
the data and arriving at some useful conclusion. Nine factors extracted for business
strategy have factor loadings 40.3 in the rotated matrix. These extracted factors have
a cumulative variance of 90.1 per cent. Two factors have been extracted for IS strategy
with factor loading for each item 40.5. These factors explain the cumulative variance
View of S/W industry
professionals

Initial literature review

BPQ developed and evaluated

SET-I of BPQ

SET-II of BPQ administered

IT industry

Software SMEs

Strategy level
executives

Software
professionals

Adoption of best practices

Figure 3.
Research procedure

Conclusion and recommendations

of 76.7 per cent. Remaining items of BPQ SET-I have been taken as such which are
Utools, usage of IS/IT and influence of IS/IT on organizational performance. Figure 4
shows the various items of the alignment constructs taken in this study.
Facts 1-9, i.e. business strength, formal business planning process, business scope,
business environment, information sharing, business-IT understanding, key strategic
issues, business dynamism and business planning process feasibility are taken for
business strategy, Pfact1 (IS strategy formulation) and Pfact2 (business-IT
communication) are taken as IS/IT strategy. Utools representing organizational
structure and influence of IS shows organizational performance. The detail of these
items is given in Table V. The shaded oval signifies that IS development has not been
taken in BPQ SET-I but in BPQ SET-II.
All the items of strategic planning of IS were ranked according to the average score
of the collected data so as to conclude which of the extracted factors is most satisfying
or dissatisfying. Table V shows the extracted factors, average score of the extracted
factors and the ranking of the factors according to the average score. The analysis of
Table V reveals that business strength is the most important factor in strategic
planning of IS thus supporting H1.
Business strength of any organization lies in its relation with the competitors and
past and present relations with the partners. Followed by it is the business scope with
average score of 4.15 and ranked second which again holds up H2.
Business scope is defined by the regularity of strategy formulation, with defined set
of procedures. All managers including that of IS department are interested to know the
business planning and participate in the process. Key strategic issues and feasibility of
the business planning are ranked third with an average score of 4.14 hence in
alignment with H3 and H4, respectively.
Business environment (4.09) comes at Rank 4. Business planning depends upon
the internal operating environment of the business with emphasis on decision
implementation and allocation of the resources which in turn supports H5. Business

Strategic
alignment
in SMEs
85

IS aligned with
organizational
goals
Business strategy
IS Development
FACT1- FACT9

IT/IS strategy

Alignment

Long-term
effectiveness

PFACT1-PFACT2
Organizational
performance
Organizational
structure
INFLU
UTOOLS

Figure 4.
Items of strategic
alignment construct

JAMR
9,1

Strategic planning
factors
Business strategy
Business strength
(Fact 1)

86
Formal business
planning process
(Fact 2)
Business scope
(Fact 3)
Business environment
(Fact 4)
Information sharing
(Fact 5)
Business-IT
understanding (Fact 6)
Key strategic issues
(Fact 7)
Business dynamism
(Fact 8)
Business planning
process feasibility
(Fact 9)
Organizational structure
Organizational
performance
IS strategy
IS strategy formulation
(Pfact 1)

Table V.
Ranking of the extracted
factors for strategic
planning of IS

Issues

Average
score
Rank

Organization identifies its strengths and weakness,

business planning influenced by competitors, business
planning affected by past/present relations with
business partners
IS is part of business planning, IS department is part of
business planning, separate planning for SME partners,
organization has separate IS to measure performance,
organization considers restructuring of organization
Strategic planning is regularly performed, defined set of
procedures for BP, all managers participate, employees
interested to know BP
IS department aware of BP
Internal operating environment of organization, decision
implementation, allocation of the resources
Business plan shared with business partners, frequent
gathering of employees data
Mission of organization a written statement,
understanding of mission
BP identifies key strategic issues

4.21

3.97

4.15

4.09

3.60

10

4.03

4.14

Frequently changing BP, BP depends upon size of the

projects
BP depends upon its feasibility

3.69

4.14

Utools (use of IS in business functions)

Influence (influence of IS on business performance)

3.76
4.03

8
5

3.34

11

4.00

1.83

12

IS strategy separately formulated, separate IS for each

department, only IS managers participate, all
transaction carried out with the use of IS, investment
on IS is properly managed
Business managers have understanding if IS
Business-IT
communication (Pfact 2) Business and IS managers communicate
IS mangers understand business goals
IS managers decide the allocation of resources
Usage
Extent of usage of IT in organization

understanding (4.03) and influence of IS/IT on organizational performance (4.03) are

ranked fifth followed by business-IT communication (4.00) at Rank 6. Formal business
planning process (3.97) is essential for strategic planning of IS, with IS and IS
department as part of business planning, separate planning for SME partners,
considering of restructuring of organization is ranked seventh among factors.
Organizational structure comes next with the extent of usage of IS/IT tools (3.76).
Business dynamism (3.69) depends upon the frequently changing business planning
and the size of the projects taken by the organization and it is ranked ninth.
Information sharing of employees and business plan with the business partners has the

tenth rank. A separate planning for IS (3.34) is less significant with the 11th rank.
Where as usage of IS (1.84) in different functions has the least effect on strategic
planning of IS. Thus taking IS as an indispensable part of business and its extent of
usage does not affect the planning process and thus can be ignored.
Furthermore the data has been analysed taking responses from top-level executives.
Which were grouped as IT and non-IT executives to know the relevance of H6 that if
there is some significant difference of the opinion between two groups. t-test was
applied to compare the mean of two groups. Table VI shows the comparison of means
and standard deviations of two groups and calculated t-value depicts that both the
groups have an almost similar response. Business strength, business scope, key
strategic issues, business planning feasibility remains as top-ranked factors for both
the groups. While usage of IS/IT remain the least valuable factor for strategic planning.
Though IT and non-IT executives have a similar viewpoint, they differ significantly on
the business environment issue and thus hold H6. According to IT executives internal
operating environment of the organization, resource allocation and decision
implementation with IS contribute more to the strategic planning of IS as compared
to the viewpoint of non-IT executives and t-value for the factor is 2.78 which is
significant at 0.01 level.
To know the perception of respondents at all the three levels of management the
data has been further studied for analysis of variance with the help of one-way
ANOVA which is used to calculate means of more than two groups. Furthermore f-test
was used to study between-group variations. Table VII portrays the comparison of
strategic planning factors among three groups of respondents, i.e. Group 1 for
executives, Group 2 for middle-level and Group 3 for operational-level respondents.
Groups 1 and 3 have an almost similar viewpoint on all the factors of strategic
planning of IS except information sharing, IS strategy formulation and business-IT
communication. Operational-level respondents favour greater information sharing of
employees and business plans, a separate formulation of IS strategy and better
communication between business and IT professionals. Group 1 differ from Group 2 in

Components
USAGE (extent of usage of IT in organization)
Utools (use of IS in business functions)
INFLU (influence of IS on business performance)
Business strength
Formal business planning process
Business scope
Business environment
Information sharing
Business understanding
Key strategic issues
Business dynamism
Business planning process feasibility
IS strategy formulation
Business-IT communication
Note: *Significant at 0.01 level

IT executives
(n 20)
Mean
SD
2.15
3.94
4.07
4.20
4.05
4.23
4.30
3.45
4.05
4.20
3.55
4.10
3.57
3.97

1.18
0.43
0.28
0.50
0.39
0.38
0.65
0.89
0.74
0.52
0.63
0.55
0.44
0.42

Non-IT executives
(n 23)
Mean
SD
1.56
3.60
4.01
4.21
3.90
4.07
3.91
3.73
4.02
4.08
3.80
4.17
3.13
4.02

0.94
0.78
0.21
0.49
0.39
0.52
0.15
0.36
0.69
0.41
0.72
0.72
1.20
0.29

Strategic
alignment
in SMEs
87

t-value
1.80
1.71
0.82
0.12
1.21
1.08
2.78*
1.43
0.13
0.79
1.23
0.37
1.51
0.43

Table VI.
Comparison of
components between IT
and non-IT executives
(respondents)

JAMR
9,1

Components

G1 (n 43) G2 (n 164) G3 (n 23) G1 vs G1 vs G2 vs FMean(SD)

Mean(SD)
Mean(SD) G2
G3
G3
value

2.43(1.53)
USAGE (extent of usage of IT 1.84(1.09) 2.15(1.21)
in organization)
3.76(0.65) 3.79(0.63)
3.95(0.22)
Utools (use of IS in business
functions)
88
INFLU (influence of IS on
4.04(0.25) 3.94(0.37)
4.14(030)
business performance)
Business strength
4.21(0.49) 3.94(0.47)
3.98(0.75)
Formal business planning
3.97(0.39) 4.00(0.42)
3.97(0.47)
process
Business scope
4.14(0.46) 3.93(0.37)
4.069(0.33)
Business environment
4.09(0.49) 3.99(0.49)
4.00(0.20)
Table VII.
Information sharing
3.60(0.67) 3.56(0.855)
4.10(0.54)
Comparison of strategic
Business understanding
4.03(0.71) 3.81(0.86)
4.08(0.47)
planning factors among
Key strategic issues
4.14(0.46) 3.78(0.90)
4.00(0.60)
three groups of
Business dynamism
3.67(0.68) 3.66(0.81)
3.50(0.79)
respondents (G1,
Business planning process
4.14(0.64) 3.72(0.55)
4.00(0.60)
executives; G2, middle
feasibility
3.34(0.94) 3.78(0.46)
4.10(0.82)
level; G3, operational level) IS strategy formulation
one-way ANOVA
Business-IT communication
4.00(0.35) 3.91(0.52)
4.28(0.34)
analysis of variance
Notes: *Significant at 0.05 level; **significant at 0.01 level
Duncans mean test

1.92

0.84

4.08*

4.59**
0.14

5.74*
0.81
4.67**
2.03
3.62*
0.84
9.83**

*
*

* 13.3**
* 6.09*

business strength factor with F-value 4.59 significant at 0.01 level, business planning
process feasibility (9.83) and IS strategy formulation (13.3) both significant at level
0.01. Group 1 has the opinion of better business strength, feasibility of the planning
process whereas just the reverse for IS strategy formulation. Group 3 also advocates
the stronger relation between business planning process feasibility and strategic
planning of IS. Similarly Group 3 supports information sharing, business-IT
communication and IS strategy formulation as evident from Table VII.
Thus a study of deviation of perception of different managerial groups indicates
that all the employees do not share a common understanding of the strategy
formulation process which supports H7 which states that different level managerial
groups have different opinions about the influence of factors on strategic planning of
IS. It is also observed that information about the business planning is not even
disclosed to middle- and operational-level employees in some of the surveyed
organizations. These two level employees find it hard to work in flow with the
organization goals without knowing the business strategy. Even IT managers are
sometimes not told last minute changes in the business strategy. The reason sought
was a high attrition rate. As a result strategic planning of IS may be defined by toplevel management with a mix of non-IT and IT professionals. Thus it is highly
recommended to have an open communication about business strategy so that every
employee can work aligned with the goals.
6. Managerial implication of the research
The application of modern technologies is useful if there is synergy between IS
strategy and business strategy. There is a strong need to institutionalize the best
practices in strategic alignment so as to develop successful ISs. The software

developing SMEs would get the benefit from this research. The research would help
various practitioners, i.e. strategic-level managers, software developers, quality
managers and project managers to first understand the importance of alignment of IS
planning with business planning and its role in developing successful ISs. The
research would assist the organizations to estimate their current business scenario and
redefine their uniqueness among other partners in industry.
7. Conclusion
This paper has used the data of software developing SMEs in National Capital Region
of India to examine the process of strategic alignment. It has developed a
comprehensive model including several factor affecting alignment and effect of
alignment on organizational performance. At the most basic level our results provide
additional empirical support for the popular argument that strategic alignment of ISs
improves organizational performance. The study shows that the organizations under
study were aware of the importance of strategic planning process of IS and
implemented the same in the organization which in fact is the basic requirement for the
success of IS in todays business scenario. Furthermore, the mechanism used to attain
the alignment depends upon the organizational business strategy, IT usage, taking IT
as part of business as well as information sharing between business and IT people.
The study is limited to software industry and highlights the need for future research on
strategic-specific IS alignment.
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About the authors
Adarsh Garg has a Postgraduate qualification in Computer Applications and a Doctorate in
Information Systems and is Associate Professor of Information Technology at the Institute of
Management and Research, Ghaziabad. She has published over 20 research papers in refereed
international/national journals of repute. Her interest areas include information systems,
software engineering, data warehouse and mining, e-commerce and green IT.
D.P. Goyal has a Postgraduate qualification in Business Management and a Doctorate in
Management Information Systems and is Professor of Management Information Systems at the
Management Development Institute (MDI), Gurgaon. Professor Goyal has more than 25 years of
experience in teaching, research, executive training and consultancy. He has supervised a dozen
PhD scholars; published two books on MIS and ERP; and published over 50 research papers in
refereed international/national journals of repute. His interest areas include management
information systems, strategic information systems, CRM, e-commerce, and business analysis
for IS solutions.

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