Abstract
Information technology (IT) investment and aligning methodologies require thorough understanding of analyses on different parallel present values and strong internal rates of return. E-commerce has given a new dimension to IT investing that elevates the role of strong IT performance as a driver of corporate strategy. Stakeholders concerned with maximizing IT return on investment (ROI) recognize the importance of central, comprehensive information resources to effective strategic business planning. Alignment of corporate and IT strategies is now a vital element of business success. To empirically support this conclusion, this study measures the relationship between strategic alignment of IT investment returns and corporate performance. A Descriptive research design using survey methodology was employed. The study included analyses of variable values involving stakeholders in banks, such as new customers and employees. A Simple Percentage Method, chi-square tests, Tables and weighted average were used to analyze data of at least five (5) banks in Ajman Emirates of UAE to determine the degree of alignment and its impact on the two strategic dimensions. A binary logistic regression analysis using Chanâs STROIS model incorporated with Venkatramanâs STROBE model was proposed to collect survey data and determine the extent of the strategic alignment. The research results provide empirical evidence that supports the hypothesis that closer alignment between corporate and IT strategies leads to increased IT ROI and improved corporate performance. This relationship holds true for all firms regardless of strategic intent for IT. The study also shows a positive correlation between early adoption of newly emergent technologies and business competitive advantage which leads to positive conclusions that strategic competition is imperative towards corporate performances.
Highlights
Information Technology (IT) in the banking sector is a norm rather than an exception, understandably increasing the focus on maximizing return on investments (ROI) in IT
This study focuses on the relationship between strategic alignment of IT investment returns and corporate performance, and seeks supporting empirical evidence
The data had more than the 70% reliability, validity, and feasibility attributes necessary for accurate analysis, allowing use of the information to find answers to our research questions. (Table 1)
Summary
Information Technology (IT) in the banking sector is a norm rather than an exception, understandably increasing the focus on maximizing return on investments (ROI) in IT. Risks and uncertainties associated with IT can cause risk-averse managers to demand assurances of high rates of returns before they approve investments in IT systems (Ross & Breath, 2002). Decision-making on IT investing, like other ventures, has been traditionally characterized by assessing ROI purely on the basis of financial calculations such as the Internal Rate of Return, the Present Value and Net Present Value [9]. Ross and Breath [11] found that 27 of 30 Senior Managers (SM) allocated funds for IT projects perceived to be strategic, and 16 SM’s funded projects when they perceived investment in the proposed IT infrastructure to be integrally necessary for the company to meet evolving customer demands, as well as open new businesses
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