The Impact of Information Technology Infrastructure Flexibility on Strategic Alignment and Applications Implementation

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The Impact of Information Technology Infrastructure Flexibility on Strategic Alignment and Applications Implementation

Sock H. Chung
Department of Computer Information Systems
College of Business
Eastern Michigan University
Ypsilanti, MI 48197
sock.chung@banyan.emich.edu

R. Kelly Rainer, Jr. **
Department of Management
College of Business
Auburn University
Auburn, Alabama 36849
(334) 844-6527
rainer@business.auburn.edu

Bruce R. Lewis
Calloway School of Business
Wake Forest University
Winston-Salem, NC 27109
(336) 758-7195
lewisb@wfu.edu

** Corresponding Author: Kelly Rainer

The Impact of Information Technology Infrastructure Flexibility on Strategic Alignment and Applications Implementation

Abstract

IT infrastructure flexibility is now being viewed as an organizational core competency that is necessary for organizations to survive and prosper in rapidly-changing, competitive, business environments. Utilizing data from 200 U.S. and Canadian companies, this study examines the impact of the four components of IT infrastructure flexibility (compatibility, connectivity, modularity, and IT personnel) on strategic IT-business alignment and the extent of applications implementation within an organization. The findings from analysis of a structural model provide evidence that connectivity, modularity, and IT personnel have significant, positive impacts on strategic alignment and that all four components have significant, positive impacts on the extent of applications implementation. The study reinforces the importance of IT infrastructure flexibility to organizations as one source for sustainable competitive advantage.

Key Words: IT infrastructure flexibility, strategic IT-business alignment

I. INTRODUCTION
In the early 1990s, Johnson & Johnson faced new business pressures when large customers, such as Wal-Mart and K-mart, made new demands on the company, such as cost savings and just-in-time stock replenishment. Johnson & Johnson’s business and IT managers acted in partnership to develop a new set of information technology (IT) infrastructure capabilities which enabled the company to provide the necessary services for its large customers while at the same time reducing costs at Johnson & Johnson [Weill & Broadbent, 1998]. In the late 1990s, Charles Schwab focused on delivering customized information to its investors in a timely manner. Using the company's IT infrastructure and applications aligned with its business focus, Schwab became a full service brokerage firm. The firm was able to provide information and process transactions in meeting its business objectives. Customers could retrieve stock quotes and place orders via Schwab's Web site. As a result, the corporation continues to be an industry leader. These two examples demonstrate that an organization’s IT infrastructure can provide tangible benefits and a continuity of business practices [Kettinger, Grover, Subanish, & Segars, 1994]. A particularly important characteristic of IT infrastructure is flexibility [Byrd & Turner, 2000]. Researchers have stated that IT infrastructure flexibility should be viewed as an organizational core competency and that IT infrastructure flexibility is necessary to handle increased customer demands without increased costs [Davenport & Linder, 1994; Weill, 1993]. As we discuss next in developing the theoretical framework for our study, two important aspects of IT infrastructure flexibility emerge from previous research: the core business applications of an organization and the strategic IT-business alignment. That is, an organization’s IT infrastructure flexibility should be reflected in its implementation of core business applications and the extent of its strategic IT-business alignment. Therefore, the purpose of this study is to empirically examine the relationship between IT infrastructure flexibility and the extent of applications implementation in the...
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