In the early 1990s, Johnson & Johnson faced new business pressures when large customers, such as Wal-Mart and K-mart, made new demands on the company, such as cost savings and just-in-time stock replenishment. Johnson & Johnson’s business and IT managers acted in partnership to develop a new set of information technology (IT) infrastructure capabilities which enabled the company to provide the necessary services for its large customers while at the same time reducing costs at Johnson & Johnson [Weill & Broadbent, 1998].
In the late 1990s, Charles Schwab focused on delivering customized information to its investors in a timely manner. Using the company's IT infrastructure and applications aligned with its business focus, Schwab became a full service brokerage firm. The firm was able to provide information and process transactions in meeting its business objectives. Customers could retrieve stock quotes and place orders via Schwab's Web site. As a result, the corporation continues to be an industry leader.
These two examples demonstrate that an organization’s IT infrastructure can provide tangible benefits and a continuity of business practices [Kettinger, Grover, Subanish, & Segars, 1994]. A particularly important characteristic of IT infrastructure is flexibility [Byrd & Turner, 2000]. Researchers have stated that IT infrastructure flexibility should be viewed as an organizational core competency and that IT infrastructure flexibility is necessary to handle increased customer demands without increased costs [Davenport & Linder, 1994; Weill, 1993].
As we discuss next in developing the theoretical framework for our study, two important aspects of IT infrastructure flexibility emerge from previous research: the core business applications of an organization and the strategic IT-business alignment. That is, an organization’s IT infrastructure flexibility