The Value of IT-Institution Alignment: A Managerial Perspective of IT-Business Alignment

Present commercial software packages (such as ERP) have incorporated management insights, industry solutions, and best-practices to facilitate IT-business alignment. However, poor alignment of IT-business still exists on a large scale in practice. In this study, we investigate the notion of IT-business alignment from a managerial perspective and argue that, in addition to the four well-studied dimensions of ITbusiness alignment (i.e., knowledge, structure, society and culture), IT should also be aligned with institution to control opportunistic behaviors in administrative practices. Our study shows that: 1) IT exhibits a function of sensing to detect problems promptly, whereas institution exhibits a function of responding to solve problems effectively. From the perspective of governance, IT-business alignment refers to technology efficiency achieved by the coordination between IT and institution; 2) The alignment process undergoes three major stages: at the first stage, alignment is achieved between institution and IT but not between business process and IT; at the second stage, with the embedded management insights and best-practice solutions, IT integration succeeds in aligning with the business process but not with the original institution; at the third stage, the organization further develops integrated IT into customized IT and adapts the existing institution to achieve both IT-institution alignment and IT-business process alignment. A decline in the managerial performance of IT systems can be expected during this process; 3) It is not always wise to improve IT systems and revise original institution to pursue a higher level in IT-institution alignment. Practitioners should take the three-stage framework into account and fully examine the required effort before they start the process of IT-institution alignment.