Introduction
Multinational and local corporations increasingly integrate technology to achieve their strategic goals and vision to guarantee a competitive advantage over rival firms. According to Elazhary et al. (2022), the information technology landscape has undergone a paradigm shift as firms seek to maximize the value of their asset base, shifting to intangible from intangible properties, thus prompting firms to concentrate on capacity building in terms of generating, managing and utilizing their IT assets. The intensity of the competition in the business environment has made it necessary for the organization’s management to have sufficient control over their IT resources as they seek viable approaches to integrate them into their strategy and processes. Lee and Lee (2008) argued that managing firms’ IT resources has seen firms adopt comprehensive IT governance frameworks to meet their strategic goals and visions. The concept of IT governance is substantiated, according to the IT Governance Institute, as the ability of the firm to channel resources towards regulating the use of information technology infrastructure in alignment will the strategic objectives and goals while at the same time ensuring the management of risk, delivery of value and performance optimization (Cuenca et al., 2011). IT governance allows the firm to navigate different alternatives of information technology capabilities, allowing it to monitor and control the improvements from one IT capability to the next.
The concept of business strategy and IT governance has gained traction over the years leading to a wide array of research in the field. However, there is a lack of systematic research on the topic to generate in-depth perspectives on the alignment between governance and strategy in the technological context. According to Bardhan (2010), strategy and IT governance should align to facilitate business operations to increase operational efficiency, reduce costs, optimize business processes and allow for improved control of risks. Additionally, the alignment of the two is vital for streamlined workflow interactions to allow the management of the enterprise to execute new business strategies ensuring they attain a competitive advantage in the industry. The achievement of long-term business objectives and goals is predicated on the viability and alignment of the business strategy and the IT corporate governance framework. Romero and Romero (2018) noted that the success of the long-term business strategy requires both the IT governance structure and strategy to function towards business-oriented goals. Lee and Lee (2008) further highlighted the repercussions of the lack of harmonization of the two constructs since one of the major concerns of IT infrastructure is the lack of management efficiency in handling emerging IT capabilities. The literature review ascertains the importance of integrating IT governance into business level strategy. However, limited research delves into expounding on the specifics of IT governance mechanisms and the alignment approach. Furthermore, there is a lack of consensus on viable information technology frameworks and mechanisms.
Variables Associated with IT Governance and Strategy
The formulation of comprehensive ITG mechanisms allows the firms to make prompt viable decisions to address emerging uncertainty in the business environment. According to Lee and Lee (2008), the mechanism provides invaluable knowledge regarding IT frameworks, the underlying risks and whether the existing IT is properly being utilized as intended. The effectiveness of IT governance is harnessed in situations where there is a shared understanding of the business goals and objectives, streamlined channels of communication of the policies and strategies and active involvement of the IT committee (Gordon, 2013). The impact of IT governance on the performance of the firm is only evident where the organization makes sufficient investments in improving its IT capabilities and resources. Apart from IT governance, management is also equipped to formulate the business strategy. Khan and Woods (2015) define a business strategy as the proposed long-term course of action that dictates how a firm will achieve its strategic vision. The harmonization of the business strategy with the IT governance structure allows the business to optimize its IT investment to accrue its intended value while conforming to its risk boundaries. The proliferation of digital technologies (communication, computing, information and connectivity) has necessitated management to rethink their extensive networks to counter the competition intensity in the external environment. A study by Acquaah (2011) on formulating business-level strategies, such as differentiation and cost leadership strategies and their influence on competitive advantage, highlighted the need to integrate IT governance to optimize the firm’s performance. Wagner et al. (2014) further argued that the alignment between IT strategy and business-level strategy enhances the value of relationships between the decision makers and their subordinates, optimal utilization of resources and seamless flow of business operations.
Critical Success Factors for the Success of IT Governance and Strategy
The development of effective IT governance and business level strategies requires the organization’s management to consider five critical areas to guarantee long-term success. According to Lluch (2011), the factors include establishing viable partnerships, recruiting the right personnel, adopting strategic approaches and business models as well as leveraging on IT-centric opportunities. In most contemporary organizations, the Chief Information Officer (CIO) is actively involved in formulating a business strategy that allows for agility in IT framework implementation. Gordon (2013) further emphasized that the organization’s competitiveness can only be achieved when IT investments and IT strategy remain consistent with the overall business strategy. Lee and Lee (2018) referred to this alignment as strategic business IT alignment that ensures continuity in terms of business and IT strategies while allowing the exploitation of IT functionality to achieve the strategic vision. A lack of alignment will hinder the firm from achieving its goals. By accessing the probable fit for emerging digital technology infrastructure, IT department executives can leverage this information to formulate a comprehensive IT strategy within the specified business context. Technical performance is another critical factor of consideration owing to the degree to which technology becomes obsolete, thus requiring adaptability.
IT Governance & Strategy in the Corporate Sector
Information technology has become a critical tool in the healthcare sector as private and public institutions formulate new strategies to optimize their performance in improving their patients’ health outcomes. Consequently, IT has altered the business landscape, resulting in new models presenting new challenges that need addressing through IT governance mechanisms (Lluch, 2011). However, despite the resources directed towards improving IT capabilities, IT governance and strategy implementation face several hindrances from bureaucracy associated with funding approvals and limited knowledge in terms of implementation, especially in public healthcare institutions. In this section, we will demonstrate how St Vincent’s Hospital Melbourne uses the concept of IT governance and strategy to attain synergy and meet their subsequent goals and objectives.
St. Vincent Hospital Melbourne is a public health facility offering a wide range of surgical, emergency, rehabilitation, diagnostics and acute medical care amongst other services. The hospital endeavors to provide improved high quality care that is cost effective while guaranteeing patients get access to medical information. The hospital has leveraged on IT infrastructure to meet these objectives by integrating IT application across various departments and organizational functions (Bradley et al., 2012). The healthcare institutions integrates the two concepts of governance and strategy using three approaches namely, organizational IT governance, the decentralization of IT governance and centralization of management models.
The centralized model of IT governance is concerned with the structural roles and responsibilities associated with subsequent project management and underlying infrastructure. According to reference, this model mainly dwells on the business level strategy majority of the healthcare institutions lack a comprehensive IT strategy. The intense daily demands of the public healthcare institutions requires the management to provide leadership through the setting up of IT steering subcommittees and committees to provide support in the implementation of the business strategy. Some of the approaches used by St Vincent’s Hospital Melbourne hospital include providing technical infrastructure, access to research and efficient administrative staffing. The size of St Vincent Hospital Melbourne in terms of operations and staff necessitates the IT department to implement an advanced project portfolio management framework to address the complex and diverse needs. According to Aarons et al. (2014), a project portfolio management tool allows the leadership to prioritize, choose and monitor the diverse portfolio of IT-oriented projects. In most cases, the role is tasked to a project manager who evaluates the risk-reward and the expected outcomes.
The decentralization of IT governance model is concerned with localization of roles and rights while channeling budgets and other resources towards implementing business strategies on a departmental level. St Vincent Hospital Melbourne has implemented the decentralized IT governance structure through the setting up of an IT steering committee incorporating representatives from senior management from different operational departments. The rationale behind selecting the interdisciplinary team is to provide a holistic perspective of how IT can be integrated in the implementation of business level strategy. The organizations objectives and goals are properly met when the committees meet regularly to evaluate the progress for both minor and major initiatives. Additionally, representatives from the IT department should also be featured in both the operational and clinical departments of the institution. In the case of St Vincent Hospital Melbourne, the management has set up a subcommittee of clinical technology to guarantee that the IT strategies are in tandem with medical and clinical practices implemented on a daily basis.
The IT governance model related to the organization structure emphasizes synergy of the corporate structure and business units in the execution of IT oriented activities (Bradley et al., 2012). The framework is pegged on the functionality of a multidisciplinary team with clearly stipulated roles of a liaison across different functional departments. Karahanna and Preston (2013) argued that composing such a team allows for process fluidity in terms of formulation, assessment and implementation of the business strategy. This approach ensures that diversity is attained owing to the diverse nature of healthcare institutions. The success of the model is predicated on the adherence to underlying processes and processes of IT governance. For instance, St Vincent Hospital Melbourne stipulated a project prioritization guideline to ensure that all department are at sync in the implementation of subsequent IT initiatives through cross-organizational input. The rationale behind this approach is to ensure key IT projects are given priority in line with their competing demands and resource needs.
Conclusion
The definition of IT governance and its connection to the concept of strategy highlights the importance of the firm’s structure, stipulated roles and processes as well as strategic leadership in the achievement of the overall strategic vision. IT governance in the healthcare sector provides the leadership with the a roadmap that highlight how the management will channel resources towards regulating the use of information technology infrastructure in alignment will the strategic objectives and the goals while at the same time ensuring management of risks, delivery of value and performance optimization. Compared to other industries, the healthcare sector elicits a given level of complexity requiring an in depth perspective in terms of IT governance. A misalignment of the strategy and IT governance is likely to result in underperformance of the firm within the industry thus it is paramount the firm adopts the best practices in terms of processes, guidelines and principles. In adhering to best practices on IT governance, the management has to ensure that the initiatives, processes and strategies are in harmony with the enterprise overarching strategies. Emphasis should be placed on implementation of governance structures that reduce the overall exposure to risks and lower the cost. The intense daily demands of the public healthcare institutions requires the management to provide leadership through the setting up of IT steering subcommittees and committees to provide support in the implementation of the business strategy. The subcommittee and committee structure allows the different units to concentrate on their core areas of operations thus enhancing the competitiveness of the firm. Lastly, centralization of the IT management process allows the leadership to maintain cost controls while maximizing the underlying IT capabilities.
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