IT Strategic Alignment Maturity and Business Performance for the Banking Industry in Kenya

Abstract

This study explored the connection between IT Strategic Alignment Maturity and the financial performance of Kenyan commercial banks. Using the SAMM framework, six alignment maturity criteria (governance, communications, value, partnership, technology scope, and skills) were evaluated. Quantitative correlation analysis was conducted with data from CIOs representing 70% of the Kenyan banking market (all Tier One banks). Findings revealed a significant positive link between IT-business alignment and profitability. The study suggests that banks seeking increased return on assets (ROA) should prioritize the development of robust strategic alignment maturity. Business-IT alignment (BITA) is a dynamic, ongoing process essential for organizational success (Luftman, 1996). Successful alignment requires strong management support, clear prioritization, and effective communication across all levels of the organization (Luftman, 1997). To navigate the complexities of a rapidly changing business environment, companies must consistently evaluate their IT investments and strategies (Luftman, Papp and Brier, 1999). A well-aligned IT function acts as a catalyst, driving innovation, competitiveness, and improved decision-making across the enterprise (Luftman, Papp, and Brier, 1995). However, alignment is challenging and requires collaboration between IT and other business units (Luftman, Lewis, and Oldach, 1993). When IT strategy and governance effectively support overarching business goals, organizations can transform their operations and unlock new levels of success (Haes and Grembergen, 2016).