An Empirical Investigation of Capability Factors Affecting Strategic Information System Planning Success

Strategic information systems planning (SISP) is more difficult in today’s world of rapid change and uncertainty. The dynamic changes in the environment require a fit between SISP and internal resources of the firm. A need exists to study SISP success based on a broad set of organizational attributes of firm. In this regard, a resource-based view (RBV) has gained increasing dominance in the strategic management field and views organization as a bundle of resources. Reviewing SISP literature reveals little on what the essential Information Systems’ formulation (IS) capabilities for SISP are and how they affect success. In this study, the relationship between capability factors and SISP success are explored. Capability factors were compiled through literature review and validated by using interviews. Hypotheses were developed and tested utilizing responses collected from 167 medium to large Iranian organizations. Using PLS for data analysis, the results show the important role of capability factors in SISP success that could be beneficial for both practice and research. DOI: 10.4018/jsita.2012040101 2 International Journal of Strategic Information Technology and Applications, 3(2), 1-17, April-June 2012 Copyright © 2012, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. cessful (Nash, 2008; Ward & Peppard, 2002). Basically, those failures are the result of poor strategic information systems planning (SISP) (Bechor et al., 2010). To make those investments more effective, SISP has been adopted prior to IS implementation (Tianmei & Baowen, 2007). Thus, information system strategic planning has become a critical success factor of many companies. According to Bechor et al. (2010), SISP is the strategic thinking process that determines the most desired information systems (ISs) for organizations to enhance and implement long-term IS policies and activities. Despite a lot of research in the topic area (e.g., Segars & Grover, 1998, 1999; Grover & Segars, 2005; Bechor et al., 2010; Newkirk et al., 2003, 2008; Warr, 2006; Cerpa & Verner, 1998; Sabherwal & King, 1995; Pyborn, 1983; Chi et al., 2005; Wang & Tai, 2003; Cohen, 2008), SISP is still ranked as highly critical issue for firms. There are frequent calls for studying the interrelationships between organizational aspects and SISP success (Lee & Bai, 2003; Lee & Pai, 2003). Although, there are some studies (e.g., Duhan, 2007; Lee & Pai, 2003) that paid attention to SISP success research based on organizational aspects, their narrow perspective is the main weakness of such those studies. The evidence from previous studies indicated that research focused on the relationship between firm-wide organizational aspects and SISP success is still limited. A major weakness of these studies was that the researchers did not perceive organization as a bundle of activities, resources, assets, and processes which directly or indirectly affect SISP success. Studies of the organizational side of the SISP success are not comprehensive enough to consider all factors. Possibly, incorporating the Resource-Based View of the firm (RBV) will enable better filling of this gap due to consideration of the firm as a set of resources and capabilities. RBV perspective has gained increasing dominance in the strategic management field and views organization as a bundle of resources (Sambamurthy & Zmud, 1994; Lee et al., 1995; Ross et al., 1996; Feeny & Willcocks, 1998a, 1998b; Bharadwaj & Sambamurthy, 1999, Bharadwaj et al., 1999; Bharadwaj, 2000; Chen, 2001; Bassellier et al., 2001; Morris, 2006; Calderia & Dhillon, 2010; Doherty & Terry, 2009; Stoel & Mohanna, 2009). Based on RBV’s strategic logic, the organization’s operative rationale for achieving its goals is through coordinated deployment of its resources. By applying RBV in IS management, the notion of IS capability emerges that considers developing and leveraging business value through IS. As Peppard and Ward (2004) have proposed, this can be assumed as the fourth era in IS management field. Based on the discussions above, two areas of questioning arise. The first are related to the need to consider organizational aspects of the firm in SISP success studies. The second area is a result of the application of RBV theory to investigate SISP. Both of these suggest that it would be valuable to conduct an examination of the role of capability factors (i.e., organizational aspects in RBV theory) on SISP success. As an outcome of insufficient empirical studies, the literature reveals little about the relationship between RBV constructs (e.g., IS capabilities) and successful SISP. Thus, there is a clear need for an empirical research to explore those constructs and their relationship between each other. THEORETICAL BACKGROUND Though there is a broad range of research on IS capability and on SISP success, particular literature on the relationship between IS capability and SISP success is scarce (Duhan, 2007). The following section explores the main conceptualizations of IS strategic planning success as found in the literature. The aim of this exploration is to appropriately adopt a conceptual model, based on RBV theory, for IS strategic planning success to be utilized in this study. Since there is no established model for organizational capabilities on SISP success, a review of related literatures was conducted to identify the capability constructs related to SISP success. Following the investigation of IS capability link in SISP theory as suggested by International Journal of Strategic Information Technology and Applications, 3(2), 1-17, April-June 2012 3 Copyright © 2012, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. Duhan (2007), we explored the existing SISP success predictors. Based on previous studies, a broad range of factors have been identified affecting SISP success. Totally, one hundred and five organizational activities were derived from the previous researches and constitute a general list of SISP success predictors. The predictors can be grouped into several dimensions. Most of the predictors were related to the planning dimension of SISP success. Other predictors were related to the management aspects of SISP. Knowledge and skills, IS-business strategic integration, IS internal relationship and IS external relationship were other major groups. Acknowledging the complexity of both SISP success and IS capability constructs, the research is based on a conceptualized a multidimensional IS capability framework for SISP success. The study incorporates the common list of IS capabilities. As Morris (2006) suggested, nine common IS capabilities (i.e., cost effective IS operations, IS development, IS technical knowledge and skills, IS infrastructure management, IS strategic Change management, IS-business Strategic integration, IS-business internal relationship, IS alertness, and IS external relationship) were considered. Then, each SISP success predictor derived from our literature review was assigned to one of those IS capability dimensions. Ultimately, all 105 SISP success factors were assigned into related groups. Accordingly, six (of nine) distinct organizational IS capabilities were revealed by the above categorization to be important for SISP success that are: IS external relationship, IS internal relationship, IS technical skills and knowledge, IS planning and change management, IS-business strategic integration, and IS infrastructure management. Besides, the abovementioned categorization was subject to further validation by using an interview. Therefore, some interviews were conducted and the emerged constructs were validated as well. RESEARCH MODEL The causal relationships between extracted IS capabilities and SISP was formulated into the research model (Figure 1) which depicts the relationship between organizational IS capability constructs and SISP success. The emerged conceptual model of IS strategy success is consistent with Lee and Bai’s (2003) suggestion to proceed toward the exploration and identification of key “organizational attributes” related to SISP to improve planning success. Adopting Lee and Bai’s (2003) approach in this study, organizational IS capabilities are seen as the source of SISP success. Figure 1 demonstrates the research model in which six organizational IS capabilities namely IS external relationship, IS internal relationship, IS technical skills and knowledge, IS planning and change management, IS-business strategic integration, and IS infrastructure management affect SISP success. Hypotheses Development