Technological change has given rise to new ways in which entities can create, deliver and capture value to customers in order to generate revenue, in other words new business models (Osterwalder, 2004, p. 15; Osterwalder & Pigneur, 2005, p. 13). It is important for entities to stay up to date with new information technologies and trends. At the same time, in order for Information Technology (IT) to add value to an entity, it is essential to achieve strategic alignment between the IT and business strategies of an entity (Institute of Directors Southern Africa, 2016, p. 62; Juiz, Gómez, & Barceló, 2012, p. 70; Wilkin & Chenhall, 2010, p. 113).

The fourth edition of the King Report on Corporate Governance for South Africa (King IV) principle 12 requires, amongst other things, that IT should add value to the entity through investments in both information and technology and that alignment between an entity’s business and IT strategies (business-IT alignment) should be enabled at two levels. Firstly, entities should capitalise on technological developments by incorporating it into the business model of the entity (Institute of Directors Southern Africa, 2016, p. 63). In the second place, entities’ technology architecture should enable the achievement of their overall business strategy (Institute of Directors Southern Africa, 2016, p. 63).

Extensive prior research has been conducted to determine the way in which rapidly evolving technology and the internet can be incorporated into business models. Osterwalder and Pigneur (2005, pp. 6–7) were pioneers in defining the concept of the business model and concluded that a close correlation exists between the prominence of the concept of business models and the introduction of the internet into the business sphere towards the late 1990s. Teece (2010, p. 173) analysed the importance of business models and found that, in order to benefit from innovation, attention needs to be paid to business model design and the impact of, amongst other factors, evolving technology on the design of business models. During subsequent research conducted, Osterwalder and Pigneur (2013, p. 238) remarked that IT can assist researchers in the strategic management field to investigate the process of generating business models.

In order to design an entity’s technology architecture in alignment with its business strategy, entities should also consider how the business model influences the IT-related decisions made in entities (Clauss, 2017, p. 392; De Haes & Van Grembergen, 2009, p. 124; Institute of Directors Southern Africa, 2016, p. 63). Both senior management of the business and IT specialists should be engaged in the design, implementation, running and revision of IT solutions (Bowen, Cheung, & Rohde, 2007, p. 191; Goosen, 2012, pp. 14–15; Rudman, 2011, p. 37). This will enable the achievement of business-IT alignment, as required by King IV (Institute of Directors Southern Africa, 2016, pp. 62–63). The business side of an entity consists of senior management responsible for designing and implementing the business objectives and implementing the structures, processes and mechanisms to address IT governance (Institute of Directors Southern Africa, 2009, p. 83). Information Technology specialists represent the senior management of the IT department of the entity responsible for implementing IT solutions and control techniques on a component level, in order to achieve IT governance objectives (Goosen, 2012, pp. 14–15; Rudman, 2011, p. 37).

Despite the emphasis King IV places on the importance of alignment between the IT department and business, miscommunication between senior management and IT specialists often take place (Rudman, 2011, p. 37–39). This statement is supported by a McKinsey&Company survey that indicated that IT managers are not collaborating with senior management and as a result the IT department does not fully support the overall business strategy (Khan, Reynolds, & Schrey, 2016). The vast majority of respondents of this survey, however, agree that IT should play a partner role in the business and that entities whose IT departments are actively involved in the overall business strategy of the entity perform its core services far better than entities whose IT departments function in isolation (Khan et al., 2016). Furthermore, the findings for the fourth successive survey indicate a major gap between the way in which senior management and the IT function view the top priorities of the IT function (Khan et al., 2016). For the purpose of this study, this will be referred to as the ‘IT gap’. As a result of the IT gap, entities currently follow an unstructured approach towards the implementation of IT solutions. The IT gap arises because there is a divergence in objectives between senior management and the IT function. The differences in objectives arise from the nature of their respective work and the tools they use. Management employs business model design tools (such as the Business Model Canvas), while IT management uses governance frameworks (such as the Control Objectives for Information and Related Technologies [COBIT]). In order for value to be generated, there is a need for a tool, framework or approach that will help to align these models.

Even though extensive research has been conducted on the manner in which technology can be incorporated into the design of business models, research relating to the design of technology architecture in line with the unique business models of entities, which should enable the achievement of an entity’s overall business strategies (Boshoff, 2014), is not readily available. Previous studies by, inter alia, Goosen and Rudman (2013) and Smit (2009) attempted to develop business imperatives that can be used as IT objectives. However, these studies were not complete since they were not linked to established models or frameworks and were not grounded in theory. This study proposes to address this gap in research by developing a comprehensive list of business imperatives that can be used by senior management and IT specialists by making use of two theoretical models.

The board of directors are responsible for the implementation of the entities’ overall strategies, whether it be business strategies or IT strategies. Generic business model design tools are available to assist senior management (or business) in formulating its business objectives, which must be achieved through the execution of business and IT strategies. King IV places the responsibility of alignment between the business and IT objectives of an entity on the board of directors (Institute of Directors Southern Africa, 2016, p. 63). The implementation of effective technology and information management should, however, be delegated to management (Institute of Directors Southern Africa, 2016, p. 62). An entity’s strategic business objectives are achieved by means of both the basic business assumptions and business imperatives (Boshoff, 2014). Basic business assumptions represent generic objectives that are not unique to specific entities (Boshoff, 2014) and the implementation of basic IT solutions and internal controls are sufficient to govern these basic business assumptions (Goosen & Rudman, 2013, p. 95). This does not represent business-IT alignment and the IT gap can only be bridged by aligning business imperatives, which are unique to each entity, with the technology architecture of an entity (Boshoff, 2014). Therefore, the business objectives derived from business model design tools must further be converted into business imperatives and objectives for the IT department in order for IT managers to implement the appropriate IT strategy that will result in the implementation of the appropriate technology architecture and for business and IT managers to work towards a common goal. Figure 1 illustrates the problem statement and the objective of the study.

The objective of this study is to develop a comprehensive list of business imperatives that can be used by senior management and IT specialists in an entity to design technology architecture in line with an entity’s business objectives. The alignment of technology architecture with business objective will take place through the IT objectives. Consequently, the problem statement addressed in this paper is the misalignment between the business and IT objectives of entities. It is largely caused by miscommunication between senior management and IT specialists; and misalignment of priorities and a divergence of objectives.

The output of this research is of value to management charged with the responsibility of executing the alignment between the technology architecture and business objectives of an entity (Institute of Directors Southern Africa, 2016, p. 63). The comprehensive list of business imperatives that can be customised by management to an entity’s unique context will improve alignment between the business and IT objectives of an entity. As a by–product, the output of this research will include structured guidance that can be used to improve communication between senior management and IT specialists. Furthermore, entities will also be provided with a tool that can be used to evaluate whether its current technology architecture supports its business objectives.

With the growing importance of IT in businesses, the research adds to the growing body of interdisciplinary research (Bishop, 2018; Enslin, 2012; Kruger, 2012; Sahd & Rudman, 2017) in the field of Corporate Governance and IT.

In order to provide management with a comprehensive list of business imperatives a qualitative study grounded in theory was conducted. The study commenced with a systematic literature review to gain an understanding of literature about business models and how they are supported by IT strategies, governance and the impact of technology architecture. Literature was also reviewed around the topic of business-IT alignment. As suggested by Sylvester, Tate and Johnstone (2011, pp. 1203–1204), initial searches relating to the broad concepts addressed by the study were conducted. During the mapping stage the focus of the searches were narrowed to yield more refined results. During the appraisal stage 108 sources were read in full and the most prominent concepts were grouped together. The analysis of the various texts during the synthesis stage resulted in a structured document in which the key theoretical concepts could be understood. Once the key theoretical concepts were understood, a business model design tool and a governance framework was selected. The motivation therefor are discussed in the following section.

Business model design tools are available to determine the business objectives of an entity. For the purpose of this study, these business objectives were converted into objectives for the IT department in the form of business imperatives. These can be used to avoid miscommunication between senior management and IT specialists to close the IT gap.

In order to compile a comprehensive list of business imperatives and provide management with guidance on the design of its technology architecture in line with its business imperatives, the following steps were followed:

The business imperatives and the mapping to the COBIT enabling processes relevant to an entity could be used by senior management and IT specialists as a basis of discussion to determine the technology architecture required to give effect to the business imperatives of the entity (refer to the ‘Practical implication for management’ section). This improved communication will enhance alignment between the business and IT objectives of an entity (Figure 2).

As previously noted, previous researchers did not create a complete list of business imperatives. Validity and rigour are added to qualitative research by anchoring research in theory, a model or a framework. Therefore, academic rigour is added to this research by the use of two established models and as such is grounded in management theory.

The use of established models and frameworks also ensure the completeness of the business imperatives identified. Using the comprehensive list of business imperatives improves business-IT alignment. As Rajcoomar (2017:227) argued, the problem with research not grounded in management theory and guides developed by professional bodies is that the methodology it employs is in most cases not scientific methods, and as such may not be complete.

Before a comprehensive list of business imperatives can be developed, it is necessary to discuss the core concepts underlying this research. This section commences by creating a common understanding for the need to comprehend business models and governance frameworks, followed by a discussion on the need for alignment.

Basic business assumptions relate to the way in which an entity’s operations are managed (Boshoff, 2014). Its implementation is essential in order for an entity to perform its basic day-to-day tasks efficiently and effectively in its specific business environment (Boshoff, 2014; Goosen & Rudman, 2013, p. 95). Basic business assumptions are expected to be established in every entity and is not unique to specific entities or industries (Boshoff, 2014). Examples of basic business assumptions include, inter alia, that all entities are profit orientated, transact across all business processes, comply with general laws and regulations applicable to all entities, and consider cash flow and business continuity to be of critical importance (Boshoff, 2014; Goosen & Rudman, 2013, p. 95). Basic IT solutions and internal controls are implemented in order to govern basic business assumptions (Goosen & Rudman, 2013, p. 95). This, however, does not constitute business-IT alignment (Boshoff, 2014).

Business imperatives expand beyond the basic business assumptions and are those essential driving forces which need to be implemented in an entity and executed extraordinarily well for an entity to meet its strategic objectives (Boshoff, 2014). Business imperatives act as the key driving forces of an entity and the successful execution thereof will give the entity a competitive advantage in its specific environment (Boshoff, 2014). Business imperatives are therefore influenced by the context of an entity and determines the technology architecture which has to be governed (Boshoff, 2014).

The context of an organisation consists of internal factors relevant to an entity, as well as external forces (Boshoff, 2014). The internal factors can be summarised by its business model, which is in turn continually influenced by ever-changing external forces such as competition, social, legal or technological changes surrounding an entity, making each entity’s business model unique (Clauss, 2017, p. 387; Osterwalder, 2004, p. 16). A business model is a theoretical tool which contains the elements of an entity and the relationships between these elements (Osterwalder et al., 2010, pp. 15–19). It provides the business context and mechanisms on how to achieve the entity’s strategic objectives (Osterwalder, 2004, p. 14) and ultimately represents an entity’s unique money-earning logic in the form of its customer relationships, value propositions and value networks (Osterwalder, 2004, p. 15; Osterwalder & Pigneur, 2005, p. 13; Teece, 2010, p. 174).

Spieth, Schneckenberg and Ricart (2014, p. 243) as well as Chesbrough (2010, p. 359) view the Business Model Canvas developed by Alexander Osterwalder as a popular and rigorous business model design tool. Clauss (2017, p. 387) studied 19 sources containing 16 different conceptualisations of business models and business model innovation. He found that the components of the business models investigated can be grouped into three categories, namely value creation, value capture and value proposition. The nine building blocks of the Business Model Canvas address all three of these categories (Clauss, 2017, p. 387; Osterwalder et al., 2010, pp. 16–17).

Osterwalder (2004, p. 16) describes the business model’s position in the entity as a theoretical link between business strategy, information and communication technology and business organisation. Business models can therefore be used to ensure a shared understanding of these three aspects by all parties involved, thereby ensuring that IT solutions are implemented in alignment with the business strategy (Osterwalder, 2004, p. 16). The effectiveness of IT solutions is, however, not guaranteed upon implementation and is greatly dependent on well-implemented IT governance structures (Bin-Abbas & Bakry, 2014, p. 261; Wu, Straub, & Liang, 2015, p. 498). IT governance is of critical importance to ensure that IT solutions implemented deliver the intended value to an entity and to ensure that IT supports an entity’s strategies and objectives (De Haes & Van Grembergen, 2009, p. 135; IT Governance Institute [ITGI], 2003, p. 10; Juiz & Toomey, 2015, p. 59; Wu et al., 2015, p. 498). One way of achieving effective IT governance, as required by King IV (Institute of Directors Southern Africa, 2016, p. 62) is by implementing an IT governance framework. There are many IT governance frameworks such as, inter alia, PRINCE2 (Projects In Controlled Environments), ITIL (Information Technology Infrastructure Library) and COSO (the Committee of Sponsoring Organizations of the Treadway Commission), each with a different purpose. Control Objectives for Information and Related Technologies is a well-known IT governance framework which incorporates the principles of various other IT standards, including ITIL, ISO/IEC 38500, ISO 17799 and Capability Maturity Model Integration (Joshi, Bollen, Hassink, De Haes, & Van Grembergen, 2018, p. 369).

The implementation of COBIT as an IT governance framework assists entities in achieving IT governance objectives and it plays a critical role in aligning business and IT objectives (De Haes, Van Grembergen, & Debreceny, 2013, p. 312; Morales, 2014). By means of a thorough investigation of the COBIT 5 toolkit (ISACA, 2013), it is clear that COBIT 5 highlights certain business objectives which should be supported by IT in such a way that the entity ultimately extracts maximum value from IT in the most cost-effective manner. COBIT 5 highlights the purpose of its enabling processes in describing the goals that will be achieved when implementing these enabling processes and their underlying governance practices. The purpose of the enabling processes and governance practices can be aligned with the business imperatives identified for the purpose of this study. Successful alignment will identify the business imperatives that serve as both business objectives and objectives for the IT department of an entity and could act as the basis to bridge the IT gap in order to ultimately achieve alignment between business and IT at the technology architecture level.

King IV requires alignment between IT and the strategic and operational objectives of the entity (Institute of Directors Southern Africa, 2016, p. 63). Strategic alignment, i.e. the alignment between business and IT objectives, is one of the focus areas of IT governance (ITGI, 2008, p. 32) and can, in fact, be seen as the key to the achievement of IT governance (ITGI, 2003, p. 22; Wilkin & Chenhall, 2010, p. 107). Strategic alignment will enable an entity to extract the desired value from their IT-related investments (Juiz et al., 2012, p. 70; Teece, 2010, p. 186; Wilkin & Chenhall, 2010, p. 113). The IT Governance Institute (ITGI) (2003, p. 22) claims that business-IT alignment cannot be separated from the mere concept of IT strategy as it needs to support the overall strategy of the entity.

In order to successfully determine the way in which the technology architecture of an entity should be designed in order to enable the achievement of the entity’s overall business objectives, the business objectives need to be converted into objectives for the IT department (Wu et al., 2015, p. 504). These objectives should then form the basis of the IT strategy in order to facilitate successful alignment with the business strategy (Wu et al., 2015, p. 504). In order to successfully execute this process, clear communication between senior management and IT specialists is needed. However, miscommunication often occurs between senior management and IT specialists as a result of IT specialists’ lack of understanding of the business objectives and the importance of IT governance and senior management’s lack of understanding of IT (Goosen & Rudman, 2013, p. 94; Osterwalder, 2004, p. 16; Rudman, 2011, p. 37). Identifying a comprehensive list of business imperatives relevant to an entity and determining how the technology architecture of an entity can be adapted to support these business imperatives will facilitate communication between senior management and IT specialists (Boshoff, 2014).

In order to create a comprehensive list of business imperatives that can be used as both business objectives and objectives for the IT department, generic business objectives derived from the Business Model Canvas were converted into objectives for the IT department. These business imperatives were then mapped against COBIT 5 in order to identify the business imperatives that will be enabled by the implementation of COBIT 5.

It is apparent from the findings of this study that effective communication between senior management and IT specialists is needed in order to successfully align the technology architecture with the business objectives of an entity (Bowen et al., 2007, p. 191; Goosen, 2012, pp. 14–15; Rudman, 2011, p. 37). However, it is also clear that miscommunication between senior management and IT specialists is a common occurrence and therefore the ‘IT gap’ (i.e. a gap between business and IT) is prevalent in most entities (Khan et al., 2016; Osterwalder, 2004, p. 16; Rudman, 2011, p. 37). It is important to have a tool or mechanism to convert the business objectives of an entity into objectives that can be understood by the IT department (Wu et al., 2015, p. 504).

From a theoretical perspective, this study adds to prior research relating to the alignment between IT and business objectives. Prior studies primarily focussed on adapting business models to incorporate rapidly evolving technology. This study focussed on the manner in which technology architecture can be designed in order to support the business objectives of an entity. A comprehensive list of business imperatives that can be used by senior management and IT specialists in an entity to ensure that the technology architecture of an entity can be designed with the objective of supporting these business imperatives in order to achieve alignment between the IT and business objectives of an entity was developed in this study. Furthermore, guidance was provided to management that can be used to evaluate whether its current IT architecture supports its business objectives.

Further guidance to design the technology architecture of an entity in line with its business imperatives, and ultimately its business objectives, by identifying the business imperatives relevant to an entity was provided to senior management and IT specialists. This was done by compiling a comprehensive list of business imperatives that act as the key driving forces of an entity and should be used as the basis to bridge the IT gap in order to ultimately achieve alignment between business and IT at the technology architecture level. Table 2-A1, included in Appendix 1, provides a list of twenty four business imperatives that can be used for this purpose.

The business imperatives which serve as both key driving forces of an entity and objectives for the IT department can act as a platform for discussion between senior management and IT specialists when designing or evaluating the technology architecture of an entity. This will ensure a shared understanding of the business objectives and the IT strategy between these two parties. Improved communication and the notion of working towards a common goal will reduce the IT gap and ensure business-IT alignment at a strategic level. Once the technology architecture has been designed in alignment with an entity’s business objectives, IT specialists will be able to build, set-up, configure, operate and maintain the individual components of the technology architecture in such a manner that the IT gap will be bridged at an operational level (Boshoff, 2014).

An area for future research is to map the business imperatives identified in this study to the operational business measures and the impact on the IT architecture of an entity.