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HOW CONTRADICTIONS FACILITATEEVOLUTIONARY TRANSFORMATION: ANEXPLORATION INTO THE DYNAMICS OFBUSINESS-IT ALIGNMENT FROM THEPERSPECTIVE OF ACTIVITY THEORYAndy WeegerNeu-Ulm University of Applied Sciences, [email protected]

Haase UlrichUniversity Hospital Tuebingen, [email protected]

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Twenty-Fourth European Conference on Information Systems (ECIS), Istanbul, Turkey, 2016 1

HOW CONTRADICTIONS FACILITATE EVOLUTIONARY

TRANSFORMATION: AN EXPLORATION INTO THE

DYNAMICS OF BUSINESS-IT ALIGNMENT FROM THE

PERSPECTIVE OF ACTIVITY THEORY

Research

Weeger, Andy, Neu-Ulm University of Applied Sciences, Neu-Ulm, Germany,

[email protected]

Haase, Ulrich, University Hospital Tuebingen, Tübingen, Germany,

[email protected]

Abstract

This paper aims at contributing to our understanding of business-IT alignment and at offering a novel

and theoretically well-grounded view on the phenomenon. Drawing on Activity Theory (AT), we argue

that business and IT reflect two distinct, yet related activity systems. We propose that applying AT ena-

bles systematic analysis of these systems, their constituents and complex interrelations. Building on AT’s

notion of tensions, we further assume that AT enables us to identify and manage misalignment within

and between the systems as well as drivers for their mutual development. Subsequently, AT provides a

coherent framework for describing and analysing complex interrelations between both domains.

To illustrate the applicability of AT and highlight its potentials to contribute to our understanding of

business-IT alignment, we conducted a single, in-depth case study. As to that, we analyse six years of

co-evolution of business and IT within a complex organizational setting. Our empirical examinations

show that continually approaching emerging tensions within and between the two activity systems and

implementing changes enables co-evolutionary processes of both systems. Though further research has

to approve the practical applicability of the framework, we provide early evidence that activity system

analysis can enable practitioners to purposefully detect and approach misalignments.

Keywords: Business-IT Alignment, Activity Theory, Activity Systems, Co-Evolution, Healthcare

Weeger et al. / Activity Theory and Business-IT Alignment

Twenty-Fourth European Conference on Information Systems (ECIS), İstanbul,Turkey, 2016 2

1 Introduction

The concept of business-IT alignment seems to be simple: key information technology resources have

to enable or support business strategies, objectives, infrastructures and processes in order to create value

for the firm (Chan et al., 1997; Sabherwal and Chan, 2001; Coltman et al., 2015). Notwithstanding more

than 30 years of cumulative research in this field (Luftman and Zadeh, 2011), we seem to be still far to

solve the riddle of how to synchronize the efforts of business and information technology (IT) in order

to deliver extraordinary value to the business (Grant, 2010).

Prior research emphasizes the potential of business-IT alignment to impact organizational outcomes,

performance and competitive advantage (Chan and Reich, 2007; Coltman et al., 2015). More im-

portantly, many empirical studies support the hypothesis that organizations revealing high levels of

business-IT alignment outperform those with low levels (Chan et al., 1997; Henderson and

Venkatraman, 1999; Kearns and Lederer, 2000; Chan and Reich, 2007; Yayla and Hu, 2011). Given its

significance, it is not surprising that the topic is still one of the top management concerns for most

contemporary organizations (Kappelman et al., 2013).

However, although the concept is intuitive and the outcomes are worthwhile, the process of aligning

business and IT seems to be rather difficult. Various reasons for this observation have been brought

forward – from too mechanistic views of business-IT alignment (Grant, 2010) over missing applicability

of findings (Vermerris et al., 2014) and, perhaps most importantly, a lack of strong and effective theo-

retical foundations (Chan and Reich, 2007; Luftman et al., 2015).

To contribute to the understanding of IT-business alignment as a process of continuous adjustments

between the two domains of business and IT, we propose a new theoretical perspective on this phenom-

enon. Drawing on Activity Theory (AT), we seek to address some of the limitations of business-IT

alignment research and put forth following research question: Does AT help us to explain the process

and complexities of business IT-alignment in practice?

We conceptualize business-IT alignment from the perspective of evolving activity systems. We argue

that the concepts of AT enable us to systematically describe and analyse the activity systems of business

and IT, their constituents, complex interrelations as well as the drivers of their co-evolution. Findings

of a single case study serve as illustration of the theoretical concepts and their applicability.

The remainder of this paper is structured as follows. First, we discuss recent developments in the field

of business IT-alignment and introduce AT. Next, our AT-based theoretical perspective on business-IT

alignment is outlined, the context of our case study as well as our methods presented briefly. Finally,

we discuss the limitations of our study as well as its practical and theoretical implications.

2 Theoretical Background

2.1 Business-IT Alignment

Up to this point, valuable research was undertaken to understand the antecedents and consequences of

alignment between business and IT (Chan and Reich, 2007; Coltman et al., 2015). Prior research partic-

ularly considers the relationship between business and IT executives (i.e. social alignment), organiza-

tional structure (i.e. structural alignment) and information system (IS) planning processes (i.e. intellec-

tual alignment) as key antecedents of business-IT alignment (Chan, 2002; Kearns and Lederer, 2003;

Preston and Karahanna, 2009; Johnson and Lederer, 2010). The central argument underlying these stud-

ies is that performance will increase if IT and business managers are able to align key IT resources and

plans with business strategy (Coltman et al., 2015). Many of these studies further presume that ‘top-

down’ processes like strategy development (Preston and Karahanna, 2009), governance mechanisms for

IT (De Haes and Van Grembergen, 2009; Schlosser et al., 2015) and enterprise architecture planning

(Ping-Ju Wu et al., 2015) play dominant roles in attaining business-IT alignment. Moreover, this view

typically conceptualizes business-IT alignment as a static relationship between business and IT (Chan



and Reich, 2007; Luftman et al., 2015) leading to a more or less stable state, which is usually measured

by capturing the business or IT manager’s perception (Coltman et al., 2015).

Looking at this stream of alignment research, several limitations can be discovered (Gerow et al., 2014;

Coltman et al., 2015). First, there is a tendency to look at alignment as a singular state resulting from

linear cause-effect relationships (limitation 1). Moreover, “current alignment research is largely atheo-

retic” (Chan and Reich, 2007, p. 311) (limitation 2). Last not least, many alignment constructs are little

helpful for IT and business executives heading for detecting misalignments and approaching them

(Luftman et al., 2015) (limitation 3).

Addressing the first limitation, a second perspective within IS research assumes that business-IT align-

ment should be approached as a dynamic process of adapting both domains to changing environments

(Agarwal and Sambamurthy, 2002; Kearns and Lederer, 2003; Benbya and McKelvey, 2006; Chan and

Reich, 2007; Grant, 2010; Karpovsky and Galliers, 2015; Luftman et al., 2015). This view assumes that

business-IT alignment is an ongoing process involving a series of coordinated actions in various dimen-

sions aiming at coordinating, adapting and synchronizing business and IT (Benbya and McKelvey, 2006;

Karpovsky and Galliers, 2015). Here, business-IT alignment is conceptualized as continuous “process

that reconciles top-down ‘rational designs’ and bottom-up ‘emergent processes’ of consciously and co-

herently interrelating all components of the business-IT relationships in order to contribute to an organ-

ization’s performance over time” (Benbya and McKelvey, 2006, p. 284). It is assumed that consciously

introduced tensions facilitate the process of alignment and, hence, organizational innovativeness. In this

regard, strategies, objectives and plans chart “a path-dependent course that will shape future decisions

and directions” in order to adapt to the changing external environment (Grant, 2010, p. 620). Moreover,

they are expected to be in reciprocal interaction with other components such as, amongst others, actors

(business and IT managers and professionals), regulations and processes and, of course, information

technology. These components link the activities of business and IT and need to be continually adapted

in order to increase organizational performance over time.

Subsequently, we follow Luftman et al. (2015) and understand business-IT alignment processes as man-

agerial behaviours that enable and promote the coordination and harmonization of business and IT ac-

tivities in ways that add business value. At best, alignment processes such as joint strategic planning

(Kearns and Lederer, 2003), investment decision making (Grant, 2010), project implementation (Ver-

merris et al., 2014), change-request generation (Zolper et al., 2013) and day-to-day IT-business interac-

tions (Wagner and Weitzel, 2012; Wagner et al., 2014) continually approach contradictions between

business and IT activities. From this perspective, business-IT alignment is seen as a process that is set

in motion by contradictions within or between the activities of both domains and that focuses on reduc-

ing contradictions in order to increase organizational performance. Such being the case, adequate theo-

retical lenses must account for the dynamics of the business-IT relationship (limitation 2). In this regard,

recent process-oriented studies on alignment were, for instance, grounded in the co-evolutionary theory

(Benbya and McKelvey, 2006) or dynamic capability theory (Baker et al., 2011; Luftman et al., 2015).

Research based on the dynamic capability theory (Teece and Pisano, 1994) views business-IT alignment

as an enduring organizational capability that enables adjustments business and IT activities across mul-

tiple dimensions (Luftman et al., 2015). Such adjustments, for instance, focus on communication, value

measurement, governance, partnership, technology and skills (Banker et al., 2011; Luftman et al., 2015),

aggregate in improved performance (Luftman et al., 2015) and may reflect a form of competitive ad-

vantage (Baker et al., 2011). These and other dimensions identified by prior research build upon a “ten-

tative classification of IT and business related activities” (Luftman et al., 2015, p. 3). Though, they may

help practitioners to approach alignment (limitation 3), they lack a theoretical foundation (limitation 2).

Based on the tenets of co-evolutionary theory, Benbya and McKelvey (2006) present a view of business-

IT alignment that focuses on self-organized emergent behaviour and structure. Here, business-IT align-

ment is considered as a “function of co-evolutionary dynamics spreading across three levels, individual

users, business and IS subcomponents, and top-level business strategy” (Benbya and McKelvey, 2006,

p. 294). Considering the principles of co-evolutionary and scale-free dynamics, amongst others, Benbya



and McKelvey (2006) propose to consciously introduce tensions within the business-IT relationship as

a means of sparking co-evolutionary dynamics. Though some components of the business IT-relation-

ship are proposed, they are not built upon strong theoretical arguments (limitation 2). Furthermore, con-

tradictions that trigger co-evolution remain somehow unspecified. Subsequently, this research provides

few actionable conclusions that enable managers to improve alignment (limitation 3).

Drawing on AT, we aim to address some of the weaknesses of prior process-oriented business-IT align-

ment research. First, using the activity system framework, we identify theoretically grounded compo-

nents or dimensions to which business-IT alignment processes should be directed. Second, we argue

that AT provides the theoretical underpinnings for the notion of contradictions as drivers of co-evolu-

tionary alignment. Third, we expect the components and principles of AT to guide practitioners’

measures to implement and improve business-IT alignment processes.

2.2 Cultural Historical Activity Theory

Stemming from the work of Vygotsky (1978) and Leont'ev (1978), AT builds on the premises that hu-

man activity is always oriented towards an object (Engeström, 1995) and mediated by an array of tools

that enables actors to achieve the outcomes of their activities more efficiently (Blackler, 1993). The

nexus of these mediating relationships is usually illustrated in form of a basic activity system model

depicting a triangle of subject, object and tools (Vygotsky, 1978).

The object of an activity refers to a ‘raw material’ or ‘problem space’ towards the actors are directed.

By recreating or modifying a culturally predefined object, human agents (the subject) aim to achieve a

desired outcome (Engeström, 2001). As such, the object motivates and organizes the actors of the activ-

ity that revolve and evolve around it (Kaptelinin, 2005; Nicolini et al., 2012). To realise the outcome

more efficiently, humans employ cognitive and physical artefacts (i.e. tools) (Blackler, 1993;

Engeström, 1995). These tools empower actors with historically collected experience and skills, while

restricting the interactions to the abilities they hold (Kuutti, 1995). The achievements of human activity

are, thus, proposed to be contingent on the capability and availability of material or symbolic artefacts.

Engeström (1987) extended the basic triangular model of human activity encompassing subject, object

and tools. By adding the community, the division of labour as well as rules and norms, Engeström’s

activity system brings attention to the larger social context and emphasises the importance of the inter-

relatedness of these elements. His activity systems explicitly recognise that subject, object and tools are

not the only constituents of human activity. Rather, his activity systems acknowledge that a community

evolves around the object. This community may possess divergent motives, involving rules and norms

as well as a division of labour. These elements mediate between the subject and the community. Hence,

Engeström’s activity systems recognise the conflictual nature of human activity and acknowledge that

actions within are “always, explicitly or implicitly, characterized by ambiguity, surprise, interpretation,

sense making, and potential for change” (Engeström, 2001, p. 134).

Engeström (1987) extension of AT also helps to explain how complex work systems evolve (Allen et

al., 2013). Activities are no more understood as isolated entities but as networks of interacting activity

systems (Blackler et al., 2000). Reflecting open systems, activities can adopt elements from the outside

or may be dependent on the outcome of related systems. For instance, new forms of mediating artefacts

can be created and transformed during the development of an activity, introduced by the community or

produced as an outcome of a related activity (Allen et al., 2011; Karanasios and Allen, 2013). However,

introducing new elements or altering existing elements may cause contradictions within the systems.

Referring to misfits “within elements, between them, between different activities, or between different

developmental phases of a single activity” contradictions are those forces that destabilize activities. They

oppose “the overall motive of the system, the aim or purpose that subjects within the system are indi-

vidually or collectively striving toward” (Allen et al., 2013, p. 840). Although they “manifest themselves

as problems, ruptures, breakdowns, and clashes” (Kuutti, 1999, p. 34), contradictions particularly expose

opportunities for change. Driving evolutionary processes, they eventually escalate into collaborative

envisioning and deliberate collective change efforts (Allen et al., 2013).



Subsequently, contradictions within and between interrelated activity systems are seen as the driving

force for the advancement of human activities (Engeström, 2001), in which “equilibrium is an exception

and tensions, disturbances and local innovations are the rule” (Cole and Engeström, 1993, p. 8). Follow-

ing these arguments, development can be seen as a process of modifying or substituting elements within

activity systems as a means of resolving emergent and historically accumulated contradictions (Cole

and Engeström, 1993). Iterative series of such transformations in activity systems, ultimately, lead to

culturally more advanced systems, where the object and motive of the activity are “reconceptualised to

embrace a radically wider horizon of possibilities than in the previous mode of the activity” (Engeström,

2001, p. 137). These cycles are referred to as expansive learning cycles. To this end, organizations that

are able to transform their activities expansively may also be able to create competitive advantages.

One relevant contribution of using an activity theoretical approach for analysing phenomena in IS re-

search is that AT brings together technology and the context into the unit of analysis. Subsequently, AT

offers a socio-technical perspective, which does not privilege the social over the technical or overly

emphasize technology (Allen et al., 2013) and acknowledges that IT-related activities within an organ-

ization are dynamic (Karanasios and Allen, 2013). Table 1 summarizes the basic principles of AT.

Principle Description

The activity system is the

prime unit of analysis

A collective, artefact-mediated and object-oriented activity system, seen in its net-

work relations to other activity systems, is taken as the primary unit of analysis.

Multi-voicedness of an

activity

An activity system always commutes multiple points of view, traditions, and inter-

ests, which are carried by its actors, its artefacts, rules, and conventions.

Historicity of activity

systems

An activity system takes shape and is transformed over lengthy periods and, there-

fore, can only be understood against its own local history and the history of the con-

cepts and tools that have shaped the activity.

Role of contradictions Contradictions as historically accumulating structural tensions within and between

activity systems are central drivers of change and development.

Possibility of expansive

transformations

An expansive transformation is accomplished when the object and motive of the ac-

tivity are reconceptualised to embrace a radically wider horizon of possibilities than

in the previous mode of the activity.

Table 1. Five principles of Activity Theory according to Engeström (2001)

According to the call for a special issue of Information Systems Journal (Karanasios et al., 2015), AT

has emerged as a founding theory for understanding change and development in work activity (Miettinen

et al., 2012). Particularly IS related fields like organisational sciences (Engeström, 2000), management

sciences (Jarzabkowski, 2003) and human computer interaction (Kuutti, 1995; Kuutti, 1999) view AT

as an accepted contemporary social theory that offers novel empirical and theoretical contributions.

Moreover, AT has also received some attention in IS research. For instance, employing AT revealed

novel insights in alignment related fields such as technology mediated change within organizations,

introduction of new IS, organizational learning and transformation of work (Allen et al., 2013;

Karanasios and Allen, 2013; Karanasios and Allen, 2014). In the following section, we will explicate

how AT helps us to increase our understanding of business-IT alignment as a dynamic process.

2.3 Business-IT Alignment as Evolving Activity Systems

We argue that AT offers a theoretical framework to analyse the process of business-IT alignment. First,

AT points out the components of the business-IT relationship towards which alignment processes should

be directed. These components are the constituents of the activities of business and IT and their recip-

rocal interrelationships. Second, the notion of contradictions helps us to explain how business and IT

co-evolve. Third, the activity system framework may help practitioners to better understand the dynam-

ics of business-IT alignment and guide their managerial interventions. Below we lay out how we con-

ceptualize business-IT alignment in light of AT.



We refer to IT as the function within an organization that is concerned with making information tech-

nology work, while business refers to all functions that are not IT. From an AT perspective, business

and IT can be captured as different yet interrelated activity systems. Taking a birds-eye view, the prin-

cipal activity of IT is directed towards information technologies that support or enable business activities

(van den Hooff and de Winter, 2011). Actors are IT professionals and managers who perform actions

like planning, implementing and delivering IT-based tools. On the other hand, the principal activity of

the business is directed to generate valuable outputs for the organization by using, amongst others, IT-

based tools. Enabling business actors to achieve their outcomes more quickly, IT assets and related

services constitute important mediating tools within the activity system of the business. Depending on

the goal of the study, business and IT activities can also be analysed in greater granularity. For instance,

one could also analyse day-to-day business activities such as research and development and interrelated

day-to-day IT activities such as conducting IT projects. Figure 1 visualises the interrelation between

business and IT activity systems (henceforward abbreviated as AS-IT and AS-B).

As laid out above, the need to change the activities arises from contradictions within or between the

activity systems (Allen et al., 2013). Contradictions within one activity system may occur when different

IS required to modify the object of the business (i.e. transform inputs into valuable outputs) reveal in-

compatibilities (i.e. contradiction within tools). Another contradiction may emerge when business actors

are not able to comply with novel regulatory requirements because of limitations of the available tools

(i.e. contradiction between rules and tools). These contradictions expose dynamic interrelations between

the elements, inefficiencies and, if they are acknowledged by the actors, opportunities for change (Allen

et al., 2013). This may lead to collective effort to modify constituents of the system and, hence, transform

the activity (Engeström, 2001). Considering the examples above, contradictions may be resolved and

inefficiencies eliminated, if IT and business engage in joint efforts to modify and re-interrelate elements

of the activity system (e.g. alter and redeploy the IS). In addition, contradictions may also emerge be-

tween a changing central activity and its related activities (Engeström, 2001). Drawing on the examples

above, such a contradiction may occur if changes in a component of the business activity also requires

adaptations to the set of tools, but the AS-IT is not capable to provide necessary changes. Insufficient

flexibility of technological assets, a lack of necessary knowledge (i.e. tools), organizational culture

(rules) or insufficient decision rights (division of labour) may inhibit the capacity of AS-IT to provide

technology that complies with new regulatory requirements, for instance.

Drawing on AT, we define business-IT alignment as a continuous process of consciously minimizing

tensions and contradictions within and between the interrelated activity systems of business and IT and

its components in order to contribute to an organization’s performance over time. Business-IT alignment

processes, hence, aim at transforming activity systems of business and IT by interrelating the compo-

nents and reducing tensions within and between the systems. Managerial behaviours usually trigger

these transformations in order to lead IT to support business activities effectively and efficiently.

Figure 1. Business and IT as interrelated activity systems

Tools

Subject Object

Rules Division of LabourCommunity

Outcome

Tools

Subject Object

Rules Division of LabourCommunity

Outcome

provides/modifies

Activity System IT (AS-IT) Activity System Business (AS-B)



3 Method

To illustrate the applicability of AT and highlight its potentials to enhance our understanding of align-

ment, we conducted a single, in-depth case study analysing six years of co-evolution of business and IT

within a large organizational setting. Below we explicate the context and methods in detail.

3.1 Research Context

Since more than one decade, policy and management of medical centres hold strong expectations in IT

tools (Erstad, 2003; Hillestad et al., 2005; Zheng et al., 2005; Chaudhry et al., 2006; Stead, 2007). Dig-

itization of healthcare processes is expected to improve efficiency and quality of care and to enhance

patient safety, for instance (see e.g. Hillestad et al., 2005; Chaudhry et al., 2006; Stead, 2007). Moreover,

hospitals are referred to as ‘decoupled organizations’ (Doege and Martini 2008) with strong occupa-

tional silos where implementing IT-induced change is found to be exceedingly difficult (Doolin, 2004;

Bhattacherjee and Hikmet, 2007; Goh et al., 2011). Given these characteristics, hospitals seem to be

ideally suited for studying emergent processes of business-IT alignment.

To vignette business-IT alignment as evolving activity systems, we decided to study the co-evolution of

business and IT within a large university medical centre (UMC) in Germany. The UMC has approx.

8,500 employees in more than 30 associated hospitals and institutes. Within these, it provides health

care services for approx. 400,000 patients per year and covers a catchment area of approx. 250 km².

3.2 Data Sources and Analysis

Since one of the authors is employed at UMC as an IT manager since 2009 (participant researcher), we

had access to historical secondary data capturing characteristics of several stages of the organizational

development of the hospital and its IT function(s) from 2009 to 2014. Particularly, we collected data on

board decisions and a substantial amount of documents utilized and generated by a project team engaged

in restructuring the IT function of the hospital (e.g. minutes of meetings, presentations, org-charts, weak

and strengths analyses). The data collected sums up to 1 GB of data encompassing more than 500 files.

As we collected organizational-level data our units of analysis are the principal activities of the business

(i.e. the hospital) and IT. Particularly, we analyse how the nature and components of these activities

have changed over the years. We understand healthcare delivery as a hospital’s general activity. This

activity is directed towards the patients and aims at improving or maintaining their well-being. Moreo-

ver, we conceptualize IT management as the principal activity of these agents who make IT work within

the hospital. Their activity is oriented towards modifying the IT assets employed within the hospital and

aims at supporting healthcare delivery by efficient provision of effective information technology.

Data analysis was conducted in two phases and guided by an iterative coding approach as proposed by

Strauss and Corbin (1998). In order to enable the non-participant researcher to develop a neutral account

of the alignment-processes, the participant-researcher was excluded in the first phase, where the non-

participant researcher scanned, selected, categorized and coded the data. The initial coding scheme was

based on the theoretical concepts of AT (i.e. our theoretical sensitivity, see e.g. Strauss and Corbin

(1998, p. 42)), but open to concepts that emerge during data analysis. The coding process followed the

guidelines of Miles and Huberman (1994). As a result, the researcher was able to develop an ample

account of the activity systems and characteristic tensions and contradictions. The considerations of the

different states of the activity systems were, amongst others, documented by means of activity systems

diagrams (a condensed example is depicted in Figure 2).

The second phase of analysis was then characterized collaborative work between the non-participant

researcher and the co-author. These joint efforts were aimed at challenging consistency of the theoretical

assumptions with the empirical data collected from different perspectives (participant and observer,

constructive knowledge and understanding) and eventually to increase confidence in the validity and

reliability of the findings (Patton, 1990; Goldkuhl, 2011). First, the participant-researcher went through

the diagrams and the underlying data and checked it against his perceptions and interpretation of the



situation. Second, both researchers discussed the findings regarding the activity systems, their interrela-

tions and developments. During their joint efforts, researchers particularly focused on interpretations

that seemed to contradict the emerging explanations. When contradictions emerged or perspectives dif-

fered, both authors got back to the data and conducted further analyses. These analyses and subsequent

discussions disclosed and increased sensitivity concerning the distance to the object of research as well

as prior assumptions and experiences. As to that, these discussions facilitated mitigation of personal and

intellectual biases. If evidence was given, analyses have been extended or revised. As a result, we were

able to gain confidence in our interpretations of the activity systems and alignment processes.

4 Findings

Below we present our analysis of the co-evolution of the activity systems AS-B and AS-IT. First, we

describe the initial state of both activity systems in 2009 by carving out distinct tensions within and

between the activity systems, constituting what Miles and Huberman (1994) refer to as “vignettes”.

Second, we present how they were transformed within five years by reducing these tensions.

4.1 Initial Situation – Tensions within and between the Activity Systems

4.1.1 The General Activity System of the Hospital (AS-B)

The general activity system of the hospital can be described as follows. The hospital and its employees

(subject) are directed towards the patients and their well-being. In order to improve healthcare delivery,

hospital’s agents employ historically evolved tools such as medical guidelines, medical devices and IS.

The relation between the community (e.g. including health insurance, resident physicians and patients’

family) and the hospital is mediated by rules such as legislation, governmental incentive schemes, insti-

tutional and system-related policies and strategies as well as organizational culture and a complex divi-

sion of labour (see Table 2). The latter, for instance, implies that the UMC conducts complex diagnostics

and treatments for inpatients and for patients referred by outside specialists.

During the last decades, hospitals have been exposed to an increased cost-pressure within the healthcare

system. This trend subjected various elements of healthcare delivery to change. As a result, several

contradictions within the UMC’s general activity systems arose. Below, we briefly present three contra-

dictions that emerged during analysis as triggers of co-evolutionary transformation processes of AS-B

and AS-IT. Amongst others, these tensions are depicted and summarized in Figure 2.

The first vignette relates to an increased demand for collaboration with the community, particularly with

other full-service medical centres and specialists outside the hospital. These specialists refer patients to

the hospital and take care of the follow-up treatment of patients. This trend is particularly driven by

increasing efficiency pressures within healthcare, governmental incentive schemes and technological

advances that allow for more complex and more expensive diagnostics and treatments. Other effects

such as dwindling numbers of specialists in rural areas entail out-tasking from specialists to large med-

ical centres and closer integration of treatment between specialists inside and outside large medical cen-

tres such as the UMC. Integration of external parties requires tools that enable information exchange

and collaboration across organizational boundaries. However, due to clinical systems that were opti-

mized for use of one clinical discipline, the UMC faced a fragmented information structure that hampers

cross-organizational collaboration. Inadequate tools contradicted hospital’s actors (subject) and special-

ists (community) to effectively modify their object (i.e. treat the patients).

The second vignette relates to consequences of altered reimbursement policies (case based lump sum

compensation). These policy changes resulted in a distinctive need to increase transparency and effi-

ciency of healthcare delivery within the UMC. However, by means of existing tools, actors were hardly

able to access data outside their own organizational entity, nor was hospital management able to assess

and optimize the performance of healthcare processes throughout the hospital. Subsequently, the signif-

icance of process standardization as well as of basic collaboration tools such as common groupware,



shared file services and remote access services increased. However, the tools available were hardly in-

tegrated but strongly fragmented. Subsequently contradictions between the need to increase transpar-

ency and optimize costs (rule), the hospital (subject) and HIS (tools) arose.

The third effect reflects changes to the division of labour within the hospital. Increasing cost-pressures

and specialization efforts lead to a centralization of cross-departmental medical functions such as en-

doscopy and anaesthesia. These centralization efforts further emphasized the need for tools, which ena-

ble transparency and efficient information exchange to, ultimately, facilitate collaboration within the

hospital as well as with external actors. However, the fragmentized tool-base contradicted the division

of labour, which organizes actors’ actions toward the object and hence limited efficiency.

AS-Component Hospital (AS-B) IT (AS-IT)

Subject Physicians, health care assistants and other

medical and administrative staff

IT staff (IT professionals as well as lateral

entry employees with medical background)

Object Patients IT assets and related services used by

healthcare and administrative staff

Outcome Maintaining or increasing patients’ well-

being

Supporting healthcare delivery including

secondary activities such as administration

Rules medical practices, reimbursement rules

(health insurers & government), law, his-

torically evolved codes of conduct, culture

IT standards (e.g. MSOF, ITIL, PMI), gov-

ernment standards (risk management), clini-

cal standards including IT (e.g. GCP), etc.

Community specialists outside hospital, collaborating

hospitals or polyclinics, public bodies, in-

formal caregivers and patient relatives, etc.

Medical and administrative staff, vendors

and other external partners, IT staff from co-

operation partners, etc.

Division

of Labour

Internal and external distribution of medi-

cal and administrative actions, specializa-

tion within the hospital, etc.

Distribution of responsibilities (e.g. group-

ware operations, software distribution, sup-

port), IT-governance (decision rights)

Table 2. Brief overview of the components of the activity systems

4.1.2 The General Activity System of IT (AS-IT)

The activity system of IT professionals (subject) aims at providing IT tools for the clinical and admin-

istrative processes of the hospital in order to support the health care delivery (object). However, the

evolution of AS-B revealed several tensions within AS-IT. These tensions aggregated so much that AS-

IT was not able to provide effective tools that support the transformations in AS-B efficiently. Subse-

quently, several issues and breakdowns emerged. Below we point out the historically evolved tensions

within AS-IT that created significant contradictions between expanding AS-B and AS-IT.

Initially, IT management focused on digitizing administrative processes such as reimbursement and re-

source management and providing infrastructure services such as data centre operations, network and

groupware functionalities. Since administration particularly governed IT-related processes, IT has been

organized as a cost centre within the administrative department (ITU1). Subsequently, the rules and the

community of the IT activity system were particularly dominated by administration. Nonetheless, IT

also found its way into medical processes. Beginning in 2002, a project team selected and implemented

an Electronic Medical Record (EMR). This trend further solidified as the hospital released a medical

digitization strategy (“from the administrative documentation to medical documentation”, aim issued in

a strategy document of the board, 12/30/2008). Subsequently, the former EMR team became an integral

part of the organizational structure of the hospital (ITU2) responsible for maintaining and advancing

medical documentation. In contrast to ITU1, which mainly comprised IT professionals, half of the staff

associated to ITU2 were former physicians or nurses. Subsequently, IT activities were shared between

two distinct units (i.e. division of labour), which differed significantly in cultural aspects. In addition,

trading on their autonomies, some medical directors also employed IT staff within their departments.

Moreover, a lack of hospital-wide IT governance structures (i.e. rules), facilitated the deployment of

various equivalent IT tools across the hospital (e.g. medical documentation systems, groupware).



The historically evolved IT activity systems produced IT tools with significant functional overlaps and

a lack of interoperability (i.e. contradictions between objects), which, in turn, increasingly contradicted

the transformation of AS-B that was needed to realize efficiency gains. Moreover, diverging cultures

and fragmented structures (i.e. tensions within implicit and explicit rules and division of labour) com-

plicated management of IT assets, particularly coordination and collaboration. Therefore, IT was in-

creasingly less able to efficiently provide effective tools for both medical and administrative purposes

(see Figure 2) and, particularly, to mitigate emerging tensions within AS-B. For instance, AS-IT re-

stricted the hospital to address increased needs for internal collaboration, to improve efficiency and

transparency throughout the organization as well as to consolidate the business functions efficiently.

Furthermore, AS-IT was hardly able to address the growing relevance of IT tools within AS-B. Ever-

increasing demands on IT revealed limited efficiency of AS-IT. Particularly, the activity systems of IT

missed adequate and ubiquitous tools to address and track requests, changes and incidents within or

across functional groups (e.g. IT service management processes). In summary, tensions within the IT

activity systems aggregated to contradictions between the evolving AS-B and AS-IT. Figure 2 summa-

rizes these findings.

Figure 2. Tensions within and between AS-B and AS-IT

4.2 Alignment processes – Transformations of the Activity Systems

The tensions described above increasingly manifested themselves as problems and breakdowns, both,

within managing and deploying IT assets as well as providing healthcare. Resulting contradictions

within and between the activity systems, particularly AS-IT’s inability to support the transformations

within AS-B escalated into a board decision to implement a change project-team mandated to envision

how structures and processes of IT need to be adapted: “In order to improve cost and quality in this [IT]

service area, which is salient for competitiveness of the hospital […] the board of directors initiates an

integration project” (Board Meeting #152, 12/15/2009). Eventually, different adaptations to components

of AS-IT have been adopted. First, the staff of ITU1, ITU2 and the distributed IT professionals as well

as their IT-related tasks and activities were to be consolidated (division of labour). Second, existing

rules such as IT decision rights were subjected to change. In particular, a consolidated IT governance

model was to be implemented. Third, based on existing best practices (ITIL), IT processes should be

standardized (tools). Below, we very briefly describe three major adaptations to AS-IT. Subsequently,

we discuss these adaptations from an AT perspective and elaborate how they enabled co-evolution of

both activities by mitigating tensions and resolving contradictions between AS-B and AS-IT and ena-

bling actors within AS-B to modify their object more efficiently.

Tools

Object

RulesLack of clear

decision rights

medical autonomy

Division of LabourIncreasing fragmentation

of task distribution and

competences

CommunityIncreased significance of

medical stakeholders,

differing agendas

Outcome

ToolsSignificance of IT tools

Subject Object

RulesCost-pressure

(e.g. due to changed

reimbursement-rules)

Division of LabourIncreased

specialization

(internal and external)

CommunityDwindling numbers of resident

physicians and medical centres,

significance of external partners

Outcome

provides/modifies

AS-IT AS-B

AS-IT is not able to efficiently provide

effective tools for AS-B (medical and

administrative purposes)

Tools do not enable/facilitate

internal and external

collaboration

Fragmented information

structure and missing

interoperability of tools

impede healthcare delivery

Tools do not enable/facilitate

needed specialization within

the hospital

Tools do not increase required

(business process) transparency

and do not allow for cost

optimization

Contradiction between

infrastructure complexity and

management-tools

Contrasting objectives facilitated

the deployment of equivalent tools

Fragmented division of

labour and (missing)

IT governance

obstructs coordination

Tensions between medical and

technical worldviews of IT staff

impeded collaboration

SubjectIT professionals

and lateral entry



Analysing the activities of ITU1, ITU2 and decentralized IT staff revealed significant redundancies as

well as several blind spots. The change team aimed at reducing complexity within the division of labour

and approaching the blind spots by centralizing IT staff within one central IT function, bundling exper-

tise and resources as well as consolidating tasks and activities. Following a structured change-manage-

ment approach, amongst others, the change also analysed the self-conception of the distinct IT units and

engaged in the process of developing a common mission statement. Furthermore, these structural cen-

tralisation efforts were accompanied by harmonizing IT decision rights and implementing several addi-

tional IT governance boards (rules). The latter should particularly ensure that IT investment decisions

and resource allocation are in the interest of the hospital, while local needs are adequately considered.

Ultimately, these centralization efforts released sufficient human and financial resources, which enabled

IT to implement efficient methods that facilitate IT operations and projects (tools). Implementing best-

practice IT management processes and project management standards as well as related IT tools pro-

vided a basis for common understanding, collaboration and shared learning. This, ultimately, helped IT

to approach the objects of IT more efficiently. For instance, the introduction of a standardized IT prob-

lem and change management process and the subsequent implementation of an issue-tracking software

significantly affected the quality of IT service delivery.

Reducing tensions within and between the division of labour, the rules and the tools of the IT activity

system also built the basis for harmonizing worldviews and objectives within IT (subject to object). The

change efforts lead to a reduction of tensions between the IT staff and their perspectives, which facili-

tated collaboration and consolidation of the IT tools deployed within the hospitals. Ultimately, changes

to the components of the AS-IT enabled actors to simplify infrastructure complexity and provide a con-

verged portfolio of IT tools for core medical and administrative processes.

However, during the process of reducing IT infrastructure complexity and implementing these adapta-

tions, several tensions within and between AS-B and AS-IT aggregated to contradictions between the

systems. Particularly, unresolved conflicts of interest regarding the nature and role of IT tools within

AS-B as well as conflicts regarding decision-making procedures within AS-IT moved to the centre of

attention. Before centralising IT staff and implementing a common IT governance structure, for instance,

medical stakeholders relied on a ‘discussion-by-proxy’ model and tasked their respective IT personnel

to create local solutions. Subsequently, negotiations about the role and nature of IT tools between the

subjects of AS-B were avoided and conflicting objectives did not surface. Furthermore, tensions be-

tween the management of specialist departments and general management regarding the decision power

were covered. The adaptations to AS-IT, particularly making decisions and related procedures transpar-

ent exposed these conflicts. Moreover, the pressure on medical and administrative stakeholders to re-

solve them increased. Most significantly, these effects led to augmented use of business steering boards

where binding decisions for diverging interest from different stakeholders were made. For instance, the

convergence of IT unearthed a latent contradiction between department managers and general manage-

ment’s directive to increase transparency and efficiency. As to that, medical directors questioned rules

that define mandatory elements of processes, which increase transparency and enable general manage-

ment to gain insight into and steer procedural details of healthcare delivery.

Our analysis shows that continually approaching emerging tensions within and between the two activity

systems and implementing changes enabled co-evolutionary processes of both systems. First, centralis-

ing IT staff, implementing rules for IT decision-making and standardizing tools increased efficiency and

effectiveness of the IT activity, particularly the coordination of medical stakeholders (community). Sec-

ond, the ensuing discussions embedded in structured decision-making procedures led to more balanced

decisions about the scope and variations of IT tools employed. In conjunction with a streamlined divi-

sion of labour and clear-cut frameworks and tools, these decisions, in turn, helped IT to harmonize and

advance their solutions and services. As to that, a consolidated tool-base and improved interoperability

mitigated contradictions within AS-B. For instance, unifying IS for similar purposes (e.g. electronic

requests for intramural consultation services, groupware, electronic patient charts, intensive care and

anaesthetists’ documentation), significantly reduced contradictions between internal and external stake-

holders (subject and community) and the division of labour. As a consequence, internal and external



collaboration as well as in transparency of healthcare delivery processes could be significantly im-

proved. For instance, harmonizing the discharge letter procedure and related IS now enables many de-

partments to share their documents with referring specialists outside the hospital. A harmonized toolset

and consolidated information architectures further enabled the hospital to pursue its specialization and

centralisation efforts. Third, the noticeable advancements within AS-IT and the tool-enabled efficiency

gains within AS-B contributed to stabilize the adjustments within AS-IT. Moreover, they facilitated the

convergence of contradicting objectives and the alignment of perspectives of IT staff.

In order to deal with the adjustments in AS-B and to resolve IT-tool-related tensions, the focus of IT

shifted from local implementations of IT-based tools to improvements of efficiency and effectiveness

within the entire hospital by delivering IS and services that balance standardization and variation. The

objective of the activity has been reconceptualised to embrace a wider horizon of possibilities than in

the previous mode of the activity. Particularly, resolving contradictions had not only increased efficiency

but also led to long-term improvements that enabled actors to deal more efficiently with emerging ten-

sions. Hence, the IT activity system passed through an expansive transformation, enabled by re-interre-

lating and adjusting existing rules and the given division of labour. Triggered by emergent tensions

within AS-B, transformation of the IT activity system also facilitates expansive transformation of AS-

B. Enabling internal and external specialization, ensuring effective collaboration between involved par-

ties as well as increasing transparency and control of healthcare delivery processes enables the hospital

to realize cost-optimizations as well as to envision and realize expanded possibilities of healthcare de-

livery (e.g. telemedicine).

Figure 3. IT activity system after passing through several alignment processes

5 Discussion and Conclusion

Prior to discussing major findings and implications of our study, we acknowledge its limitations. The

primary aim of this study was to introduce AT as a novel theoretical perspective on business-IT align-

ment, where strong and effective theoretical foundations are rare (Chan and Reich, 2007; Luftman et al.,

2015). Therefore, our objective was not to provide exhaustive evidence for AT applicability within busi-

ness-IT alignment research. Rather, the case study was intended to serve as an illustration for our theo-

retical propositions by analysing major transformations of business and IT in practice. As to that, we

have to acknowledge that our empirical example primarily relies on retrospectively collected secondary

data within a single, yet complex domain. Moreover, one of the researchers was actively involved in the

change processes. Although, data was triangulated, all insights and rivalry explanations discussed inten-

sively during analysis, this involvement may impose a bias on the empirical vignettes. Nonetheless, the

in-depth case study enabled us to provide some examples that illustrate the explanatory power of AT.

Further research may address these limitations and underline the unique contributions of an AT perspec-

tive in other contexts. It would be interesting, for instance, to proactively study the dynamics of business-

IT alignment in other domains, investigate how involved actors (implicitly) consider the activity systems

ToolsDecreased infrastructure complexity

Object

RulesStreamlined decision

rights; beginnings of a

common culture

Division of LabourCentralized and

transparent distribution

of tasks and

competences

CommunityIncreased significance of

medical stakeholders,

differing agendas

Outcome

ToolsSignificance of IT tools

Subject Object

RulesCost-pressure

(e.g. due to changed

reimbursement-rules)

Division of LabourIncreased

specialization

(internal and external)

Outcome

provides/modifies

with increased efficiency

and effectiveness

AS-IT AS-B

Harmonization and

standardization of IT-tools

reduced the extent of variation

and the alignment of IT-tools with

individual needs

Increased transparency

uncovers tensions between

subjects and rules

IT service-management framework

and project management

standards helps to deal with

infrastructure complexity

Some tensions could be

solved and coordination

improved

Restructuring IT and

developing a mission

statement helped to converge

perspectives

SubjectIT professionals

and lateral entry

CommunityDwindling numbers of resident

physicians and medical centres,

significance of external partners



and its components and how common conceptions about the activity systems and the role of IT within

enable them to consciously adopt and adapt business-IT alignment processes. Additionally, we were

only able to present high-level analyses of the activities, their components and the tensions driving their

co-evolution briefly within this paper. Further research should analyse the tensions, their reciprocal de-

pendencies as well as their potential for co-evolutionary transformation more deeply.

Aimed at figuring out if AT helps us to explain the process and complexities of business IT-alignment

in practice, our primary theoretical contribution is the introduction of a novel theoretical perspective on

business-IT alignment that can be –depending on the goal of the study– applied to analyse strategic and

operational processes. Hereof, we propose to conceptualize business and IT as –at least– two distinct,

yet related, socially recognized and materially mediated activity systems. Our study shows that these

systems, their constituents and complex interrelations can be systematically described and analysed in

the light of AT. As to that, we show that AT provides a strong theoretical foundation and a robust

framework that is able to facilitate rigorous process-oriented studies as well as it is able to guide en-

deavours of detecting and approaching misalignments in practice. Consequently, we provide early evi-

dence that AT may help to overcome some of the limitations of alignment research and, hence, help us

to increase our understanding of the dynamics of business-IT alignment. As to that, AT may pave the

way for theoretical advances in this field that offer solid practical contributions.

Building on AT’s notion of tensions within and between the six components of human activity (subject,

object, tools, community, rules, and division of labour), we already carve out some novel findings. Our

empirical examinations show that continually approaching emerging tensions within and between the

two activity systems and implementing changes enabled co-evolutionary processes of both systems. Our

empirical investigation demonstrates that AT’s assumption, namely tensions and contradictions within

and between interrelated activity systems, are the driving force for their advancement (Engeström,

2001) does also apply to business-IT alignment. Once identified and consciously approached by

measures aimed at reducing them, tensions within and between the activity systems are triggers of busi-

ness-IT alignment processes. Analysing data spanning six years of transformation processes within IT

and business also shows that equilibrium within business and IT is an exception and tensions, disturb-

ances and local innovations are the rule. Moreover, the examples demonstrate that business-IT alignment

is in practice rather approached by a sequence of iterative transformation intended to solve local ten-

sions. Mitigating local tensions, may also mitigate within or between in related components or activity

systems. However, it may also cause latent tensions to aggregate and surface, which need to be ap-

proached subsequently in order to enable expansive transformation of both systems. Nevertheless, strat-

egies chart the course that will shape these iterative transformations (Grant, 2010)

Though further research has to approve the practical applicability of the activity systems diagrams, we

find early evidence that the constructs of AT may be more helpful for IT and business executives as, for

instance, abstract concepts of system dynamics are. Managers from business and IT heading for detect-

ing misalignments and approaching them could easily use the concepts of AT to guide their analysis

(i.e. root-cause analysis) and subsequently select and adopt adequate business-IT alignment processes.

Further research may conduct longitudinal studies that aim to analyse tensions that induce business-IT

alignment processes and the effectiveness of various measures to initial tensions. For instance, research-

ers may collect and analyse data on sequential rollouts of new IS or adaptations to existing IS, how the

role of these IS within affected activities changes and how alignment practices consider the role of the

IS and its potentials to resolve or create tensions within the systems. Such analysis may demonstrate the

potential of activity systems theory to facilitate business-IT alignment in practices and reveal novel

theoretical insights. For instance, research could examine to what extend shared understanding about

affected activities are a prerequisite for minimizing contradictions within and between AS. Knowledge

about the role of common understanding between stakeholder from business and IT about the contra-

dictions that need to be resolved may enable business and IT to assess the consequences of consciously

introduced changes and, hence, facilitate business-IT alignment.



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