Differences in Stage of Integration between Business Planning and Information Systems Planning according to Value Configurations

Introduction Today many companies make large investments in information systems (IS) (Earl and Feeny 1994). Yet executives often question the business-IS alignment, namely whether these investments support their strategic objectives or whether opportunities to exploit IS for competitive advantage are being overlooked (Henderson and Venkatraman 1993). There are both enablers and inhibitors of business-IS alignment (Luftman, Papp et al. 1999) and one area considered important for improved alignment is integration of strategic business and IS planning (Teo and Ang 1999). This research is concerned with how stages of integration between strategic business and IS planning are related to different value configurations and eras of IS growth. The research question can be stated as: What differences in the stages of integration between business and IS planning are found according to companies' value configuration and are these differences affected by their era of IS growth? The word planning is used in the literature in many and various meanings: as future thinking, as controlling the future, as decision making, as integrated decision making, and as a formalized procedure to produce an articulated result, in the form of an integrated system of decisions (Mintzberg 1994). In this paper, a planning approach is defined as strategic decision making through a rational process that allows managers to formulate and document strategies. The aim of this study was not to do process research, but rather to investigate how IS planning (ISP) is integrated with business planning (BP). Value configuration can be defined as an organization of activities, resources, and technologies, in order to create firm level competitive advantage. Our assumption is that there exist three basic value creation logics. Based on this assumption, this paper discusses differences in stages of integration between business and IS planning according to companies' value configurations, and attempts to relate these differences to eras of IS growth. Integration mechanisms Although no precise definition of strategic alignment of business and IS strategies has gained widespread acceptance, many authors share a similar general interpretation of the term. Strategic alignment is said to be present when: i) business strategies are enabled, supported, and stimulated by information strategies (Broadbent and Weill 1993); ii) the goals and activities of the business are in harmony with the information systems that support them (Woolfe 1993); iii) information systems support organizational goals and activities at every level (Lederer and Mendelow 1989); and iv) choices within content and process dimensions of IS planning are mutually supportive and the two dimensions themselves are harmonized in a manner that is consistent with competitive strategy (Das, Zahra et al. 1991). Integration between business planning and information systems planning is one important enabler of business-IS alignment (Teo and King 1997; Luftman, Papp et al. 1999; Teo and Ang 1999). Teo and King (1997) found a significant positive relationship between the level of business and IS planning integration and the extent of information systems contribution to organizational performance. King and Teo (1997) have suggested a stages of integration model for the evolution of integration between strategic business and IS planning. The first stage is a separate planning with administrative integration characterized by the integration mechanisms in Table 1, such as a technically oriented and non-strategic role of the IS function. The second is a one-way linked planning with sequential integration characterized by integration mechanisms in Table 1, such as performance criteria of business strategy contribution. The third is a two-way linked planning with reciprocal integration such as frequent IS executive participation in business planning. …