Knowledge that Transforms

:Information technology (IT) investment decisions have traditionally focused on financial or technological issues. Responding to what appears to be a lack of payoff in IT investments, researchers as well as practitioners recently have suggested that traditional valuation analyses are incomplete and have called for additional work to identify “hidden” or seldom-considered costs and benefits. The present paper attempts to improve understanding of a chief source of these hidden costs and benefits: those changes in the social subsystem brought about by a new IT.Fifty IT decision-makers in a broad variety of industries were interviewed to gain insight into what, when, and how often social subsystem considerations are included in IT investment-decision processes. Data from the interviews show that in practice some of those issues are often minimized, excluded, or put off until the IT is implemented—thus affecting optimality of investment choices and IT payoff. The paper extends existing theory by describing systematic patterns of inclusion and exclusion of these costs and benefits. In addition, a decision aid is provided to help IT executives begin thinking about which social subsystem costs and benefits they should incorporate in various decisions. Suggestions are also made on how data regarding social subsystem costs and benefits might be gathered. By incorporating social subsystem costs and benefits in the IT investment process, decision-makers gain a greater appreciation for hidden costs and benefits, and thus clarify anticipated IT payoff.

To provide managers with a critical insight into the management of new technology, this paper uses a case study research strategy to examine the technology management experiences of a leading UK manufacturing organization during its adoption of a vendor-supplied Manufacturing Resource Planning information system.<br />

:Despite significant progress in evaluating the productivity payoffs from information technology (IT), the inability of traditional firm-level economic analysis to account fully for the intangible impacts of IT has led to calls for a more inclusive and comprehensive approach to measuring IT business value. In response to this call, we develop a process-oriented model to assess the impacts of IT on critical business activities within the value chain. Our model incorporates corporate goals for IT and management practices as key determinants of realized IT payoffs. Using survey data from 304 business executives worldwide, we found that corporate goals for IT can be classified into one of four types: unfocused, operations focus, market focus, and dual focus. Our analysis confirms that these goals are useful indicators of payoffs from IT in that executives in firms with more focused goals for IT perceive greater payoffs from IT across the value chain. In addition, we found that management practices such as strategic alignment and IT investment evaluation contribute to higher perceived levels of IT business value.