Abstract
With significant advancements in digital technologies, firms find themselves competing in an increasingly dynamic business environment. Therefore, the logic of business decisions is based on the agility to respond to emerging trends in a proactive way. By contrast, traditional IT governance (ITG) frameworks rely on hierarchy and standardized mechanisms to ensure better business/IT alignment. This conflict leads to a call for an ambidextrous governance, in which firms alternate between stability and agility in their ITG mechanisms. Accordingly, this research aims to explore how agility might be integrated in ITG. A quantitative research strategy is implemented to explore the impact of agility on the causal relationship among ITG, business/IT alignment, and firm performance. The results show that the integration of agile ITG mechanisms contributes significantly to the explanation of business/IT alignment. As such, firms need to develop a dual governance model powered by traditional and agile ITG mechanisms.
Scales
| HOC: Agile ITG mechanisms | |||
| LOC | Item Acronym | Item | Key words from literature |
| Agile structures |
ITG_AS1 | In digitization projects, our teams are interdisciplinary. | Interdisciplinary teams |
| ITG_AS2 | For digitization projects, our teams organize themselves largely independently. | Self-organized project teams | |
| ITG_AS3 | The responsibility for the development of innovations is bundled in a concentrated unit (e.g., Innovation Lab). | Innovation labs | |
| ITG_AS4 | Our firm has a digital transformation steering committee to prioritize innovation initiatives. | Transformation/innovation committee | |
| ITG_AS5 | Our firm has a multidisciplinary steering committee consisting of representatives of all management levels. | Multidisciplinary transformation/ innovation committee | |
| Agile processes |
ITG_AP1 | In our firm, agile project and innovation methods (e.g., Scrum, DevOps) are in widespread use. | Using agile practices/agile project management |
| ITG_AP2 | Employees are encouraged to take reasonable risks (e.g., trying innovative ideas, trial, and error). | Trial-and-error processes | |
| ITG_AP3 | Our firm uses change management processes to constantly optimize overall governance. | Change management processes | |
| ITG_AP4 | For the development of products and features, we regularly use the principle of prototyping. | Prototyping | |
| ITG_AP5 | In our firm, we conduct co-creation workshops with customers as an innovation measure. | Co-creation workshops with clients | |
| Agile relational mechanisms |
ITG_AM1 | Executives in our firm treat others as individuals rather than just as a member of a group | Transformational leadership |
| ITG_AM2 | Our firm attaches great importance to continuous training of employees in the area of digital transformation to promote skills for agility. | Continuous employee training/cross-functional trainings | |
| ITG_AM3 | Our communication structures are organized flat. | Lean communication structures | |
| ITG_AM4 | In the digital transformation, our firm attaches great importance to the empowerment and participation of its employees. | Empowerment of employees | |
| ITG_AM5 | In the digital transformation, our firm attaches importance to cooperation with start-ups to promote agility. | Cooperation with start-ups | |
| HOC: Traditional ITG mechanisms | |||
| LOC | Item Acronym | Item | Key words from literature |
| Traditional structures |
ITG_TS1 | Our company has a steering committee at the executive level responsible for determining IT development prioritization. | IT steering committee |
| ITG_TS2 | Our company has a steering committee comprised of business and IT people. | IT project steering committee | |
| ITG_TS3 | CIO has a direct reporting line to the CEO and/or COO. | CIO has a direct reporting line to the CEO and/or COO | |
| ITG_TS4 | CIO is a full member of the executive committee. | CIO on executive committee | |
| ITG_TS5 | IT is a regular agenda item and reporting issue for the board of directors. | IT strategy committee at level of board of directors | |
| Traditional processes |
ITG_TP1 | Our firm has established a formal prioritization process for IT investments in which business and IT is involved. | Portfolio management |
| ITG_TP2 | Our firm has established formal processes to control for and report upon budgets of IT. | IT budget control and reporting | |
| ITG_TP3 | In our companies, we use various key performance indicators (KPIs) to measure IT performance. | IT performance measurement | |
| ITG_TP4 | Our firm has established formal processes to define and update IT strategies. | Strategic information systems planning | |
| ITG_TP5 | Our firm has established formal processes to govern and manage IT and digitalization projects. | Project governance/management methodologies | |
| Traditional relational mechanisms |
ITG_TM1 | In our company, business and IT managers/executives have informal meetings on a regular basis. | Informal meetings between business and IT executives |
| ITG_TM2 | Internal corporate communication regularly addresses IT issues. | Internal communication addressing IT on a regular basis | |
| ITG_TM3 | The CIO or similar role in our company is able to clearly articulate a vision for IT’s role in the company. | IT leadership | |
| ITG_TM4 | Our executives/senior management give good examples of acting as “partners.” | Executive/senior management giving the good example | |
| ITG_TM5 | In our company, specific communication mechanisms are used to improve communication between business units. | Business/IT account management; Knowledge management | |
| HOC: Business/IT alignment | |||
| LOC | Item Acronym | Item | Key words from literature |
| Product strategic alignment | ALIN_P1 | Our corporation attempts to be ahead of its competitors in introducing new products. | IT strategies supporting new products |
| ALIN_P2 | Our corporation’s current systems enable it to introduce new products earlier than its competitors. | ||
| ALIN_P3 | Our corporation attempts to be ahead of its competitors in offering a wide range of products. | Products diversification strategies | |
| ALIN_P4 | Our corporation’s current systems enable it to diversify its products. | ||
| ALIN_P5 | Our corporation attempts to be ahead of its competitors in ensuring that its products are distinctively different from those of its competitors. | Differentiation strategies | |
| Quality strategic alignment |
ALIN_P6 | Our corporation’s current systems help it distinguish its products from those of its competitors. | |
| ALIN_Q1 | Our corporation attempts to be ahead of its competitors in quality of products rather than price. | IT strategies supporting product quality | |
| ALIN_Q2 | Our corporation’s current systems allow the corporation to improve the quality of its products. | ||
| ALIN_Q3 | Our corporation constantly improves the efficiency of its production processes. | Production efficiency strategies | |
| ALIN_Q4 | Our corporation’s current systems help improve the efficiency of its production processes. | ||
| ALIN_Q5 | Our corporation attempts to be ahead of its competitors in providing high-quality service to its customers. | Service quality strategies | |
| ALIN_Q6 | Our corporation’s current systems enable the corporation to provide high-quality customer service. | ||
| Market strategic alignment | ALIN_M1 | Our corporation attempts to be ahead of its competitors in intensive marketing of its products. | IT strategies supporting marketing strategies |
| ALIN_M2 | Our corporation’s current systems enable it to intensively market its products. | ||
| ALIN_M3 | Our corporation attempts to achieve growth by expanding into new markets. | New market strategies | |
| ALIN_M4 | Our corporation’s current systems assist it in identifying new markets. | ||
| HOC: Firm performance | |||
| LOC | Item Acronym | Item | Key words from literature |
| Financial results |
PERF_F1 | Our corporation’s return on investment (ROI) is better than the average in the same industry. | Return on investment (ROI) |
| PERF_F2 | Our corporation’s return on equity (ROE) is better than the average in the same industry. | Return on equity (ROE) | |
| PERF_F3 | Our corporation’s return on assets (ROA) is better than the average in the same industry. | Return on assets (ROA) | |
| Operational excellence | PERF_O1 | Our corporation has better productivity improvements than other corporations in the same industry. | Productivity improvements |
| PERF_O2 | Our corporation has a better timeline of customer service than other corporations in the same industry | Timeline of customer service | |
| PERF_O3 | Our corporation has a better production cycle time than other corporations in the same industry. | Production cycle time | |
| Customer perspective | PERF_C1 | Customers perceive our corporation’s quality of products and services as better than that of other corporations in the same industry | Quality |
| PERF_C2 | Our corporation has higher customer satisfaction than other corporations in the same industry. | Customer Satisfaction | |
| PERF_C3 | Our corporation has a better corporate image than other corporations in the same industry. | Brand/Image | |