Is Modularity the Answer? The Role of Modularity as an Enabler of Shared Understanding Between Business and IT

In today's rapidly evolving business landscape, characterized by heightened competition and unpredictable market dynamics, organizations are under increasing pressure to adapt. In agile environments, too little shared understanding between business and IT is one reason for project failure. We focus on the effects of business process and IT modularity on agility through shared understanding among business and IT professionals. An understanding of the differentiated effects of architecture management on agility and shared understanding can help us to gain a richer understanding of the antecedents of agility. Using the work system theory to link modularity and shared understanding, we develop a theoretical model and test it using survey-based data from the banking industry. We find that in addition to the direct impact of facets of modularity on agility, shared understanding serves as a mediating factor that enhances the effectiveness of modularity on agility. However, modularity does not enable shared understanding between business and IT professionals per se. While modular IT architectures impact the shared understanding about business processes, modular business processes support shared understanding of business strategy.