infrastructure binds the IT components into a reliable set of shared IT infrastructure services. The process of binding components into a service can be achieved by an internal
IS group or by an outsourcer. Evidence for IT infrastructure capability can be found in the nature of IT infrastructure
services in a firm. The notion of IT infrastructure and thus shared services leads to an identifiable set of services centrally coordinated and offered across firms in multi-business
unit firms Weill et al., 1995. The set of IT infrastructure services is relatively stable over time and focused on the long-term strategic intent Hamel and Prahalad, 1989, 1994 of the
firm. However, the systems required for business processes i.e. applications are expected to change regularly to meet the needs of current strategies of specific businesses within the
firm.
1
The business connectivity of IT infrastructure can be defined in terms of ‘reach and range’ Keen, 1991; Keen and Cummins, 1994. ‘Reach’ refers to locations that can
be connected via the infrastructure, while ‘range’ determines the level of functionality i.e. information andor transaction processing that can be shared automatically and
seamlessly across each level of ‘reach’.
4. Model and propositions
Drawing on the literature, we identified four aspects of firm context for investigation when assessing patterns of IT infrastructure capability: industry differences, the level of
marketplace volatility, the extent of synergies amongst business units in firms, and char- acteristics of strategy formation processes in firms. The model for the study, which
evolved from the literature analysis and initial concept formulation, is presented in Fig. 2.
M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 161
1
While we are focussing on firm-wide IT infrastructure services, it is also possible to envisage business unit infrastructure services to meet the needs of several functions across a business unit.
Fig. 2. Preliminary model: firm context and IT infrastructure capability.
Constructs which appear in italics in the next paragraphs are part of the model in Fig. 2.
IT infrastructure capability: Key attributes of IT infrastructure capability are the extent
to which it is shareable and reusable across the firm Duncan 1995. We define IT infra- structure capability as a combination of functionality and connectivity. Functionality is
identified by the IT infrastructure services offered firm-wide. Connectivity is identified by the infrastructure reach and range. Taken together services and reach and range provide a
practical measure of IT infrastructure capability.
Thus IT infrastructure capability comprises two elements: Functionality
1. The number of firm-wide infrastructure services, with a higher number indicating a high level of capability.
2. The nature of those services. For example a larger number of services in the area of communications management indicates a high level of capability in communications
management.
Connectivity 3. The extent of reach and range with a higher reach and range indicating a higher
level of capability. 4.1. Propositions
Seven propositions explore the linkage of patterns of IT infrastructure capability and firm strategic context.
4.2. IT infrastructure capability and industry differences The demand for IT infrastructure capability will vary amongst industries due to
different levels of information intensity Porter and Millar, 1985. Industries generally differ in the rates of change, extent of cross selling of products, cross ownership of
customers and similarly of processes. Bradley et al. 1993 identify three industries at the forefront of change: finance, manufacturing and retail. Finance is posited to have more
infrastructure due to higher integration between business units and more rapid product development cycles. In finance firms, customers often utilise several products from
different parts of the firm such as loans and insurance. Thus firms desire a picture of the entire relationship with a customer. Concurrently, finance firms are experiencing
rapid change due to ongoing internationalisation of the finance industry and the need to build infrastructures to support clients whose businesses are expanding globally. Retailing
is posited to have extensive infrastructures due to commonality of processes, e.g. supply chain management across different business units or brands.
Proposition 1: Firms operating in different industries have different requirements for information, and thus different patterns of IT infrastructure capabilities.
4.3. IT infrastructure capability and marketplace volatility IT infrastructure capability is a major business resource and differentiator amongst firms
which lead their industry in changes in the dominant basis of competitiveness McKenney,
M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 162
1995. Firms which value flexibility because of marketplace volatility are expected to have more extensive IT infrastructure capabilities because of business requirements to respond
to rapid changes in the marketplace Quinn, 1992. Such changes often require improved customer service and increasingly emphasise higher interdependence between business
units; thus leading to a stronger impetus for shared firm-wide services. Information technology infrastructure investments “provide real options and flexibility to managers
to enable them to position the firm to take advantage of environmental uncertainties” Kambil et al., 1993, p. 175. IT infrastructure therefore is a major determinant of a firm’s
‘business degrees of freedom’ as its business functionality “will determine which IT dependent products and services are practical and which are not” Keen, 1991, p. 18.
Proposition 2: Firms with greater emphasis on the need to change products more quickly will have more extensive IT infrastructure capabilities.
Proposition 3: Firms which tend to make resource decisions based on current needs will have less extensive IT infrastructure capabilities.
Proposition 4: Firms with greater emphasis on flexibility to meet changing needs of their marketplace will have more extensive IT infrastructure capabilities.
4.4. IT infrastructure capability and business unit synergies The increasing importance of relationship-based services and ‘single point of customer
contact’ raises the stakes for information sharing and common transaction processing across the business to capitalise on opportunities for cross-selling and synergy. Firms
where business units share products, customers, business processes, suppliers or expertise are expected to provide more extensive firm-wide IT capability to gain benefit from
cross-business unit synergies
. This business flexibility requires IT capability Duncan, 1995 to share information across products, services, locations, companies and countries.
To realise these synergies requires a common infrastructure and an end to separate IT platforms for related business activities in the same firm Keen, 1991.
Proposition 5: Firms with greater emphasis on identifying synergies between business units will have more extensive IT infrastructure capabilities.
4.5. IT infrastructure capability and strategy formation processes Providing extensive information technology capabilities in firms indicates a high level
of consideration of IT in business strategies Henderson and Venkatraman, 1992. Align- ment of business and information technology strategies requires strategy formation
processes Hax and Majluf, 1988; Segev, 1988 which encompass and integrate both
long term business and technology developments Broadbent and Weill, 1993; Powell and Dent-Micallef, 1997. Successful strategy formation processes in the complex
environment of multi-business unit firms require a high level of planning sophistication to achieve their goals, particularly the goal of creating synergy between business units
Pearce et al., 1987 or alignment of IT infrastructure with business strategy.
Proposition 6: Firms with greater integration of information and IT needs as part of the firm’s overall planning processes will have more extensive IT infrastructure
capabilities.
M. Broadbent et al. Journal of Strategic Information Systems 8 1999 157–187 163
Proposition 7: Firms with greater emphasis on tracking the success of implementation of strategic intent will have more extensive IT infrastructure capabilities. The indicators of
the extent of a firm’s emphasis are: i the level of reporting progress against strategic intent; ii whether achievements are actively measured; and iii whether those
responsible are identified.
5. Research approach and method
