1.
Introduction
The amount of corporate funds spent on IT
investment has always been controversial. For many years it has been thought by some
executives that too much has been spent and not enough return has been obtained from this
IT expenditure. Robert Solow (1987) the famous Nobel Prize winning economist has suggested
that in business one could see computers everywhere but in the productivity statistics.
Brynjolfsson (1993) pointed that there was a productivity paradox which meant that
computers where not delivering the value promised. The Economist Newspaper said in 1991,
that the return on IT was so poor that
organisations would have done better to have invested that same capital in almost any other part of their
businesses.
But was the performance of the investment made in
IT really so terribly bad?
The business community wanted to be able to see
the benefits of IT in the same way as you see a big colourful brass band coming down the
street. They wanted their IT benefits right up in their faces, as the modern idiom would
say. However it is not clear why the business community should have expected IT benefits
to be so glaringly obvious. The demand for clear and definite benefits may be attributed
to management apparently desperate need for control. Keidel (1995) clearly identified this
need when he wrote: ‘The overwhelming tendency for management is to be obsessed with
control.’
Maybe this expectation was just unreasonable and
unrealistic. There are many aspects of business investment where the benefits are really
rather subtle, but are no less real or material for that. Examples are corporate head
offices, prestige motor cars for executives, and special celebratory conferences to
mention only three. Maybe, such is the case with IT investment – perhaps not all of
the time but some of the time.
In addition to this, the business community
generally demanded that IT benefits be always expressed in terms of financial values i.e.
how much money was saved or how much extra money was made as a result of the IT
investment. Some IT investment benefits,
however cannot be satisfactorily stated in monetary terms. Nonetheless they are real business benefits and need to be taken into
account in any development of the investment evaluation equation.
2.
Economics of information
The measuring and managing of IT benefits is a
difficult business challenge which has plagued the IT industry, IT professionals,
consultants and academics, for many years. The main reason for this is that despite the
considerable amount of research conducted by academics and consultants so far no
comprehensive or rigorous economics of information has been developed.
By economics of information is meant a systematic series of concepts and theories that explain the role
which information and information systems play in assisting individuals or organisations
in their conception, production and delivery of goods and services both in the private and
public services. There are probably several reasons why the economics of information has
not been developed. One of the most important reasons is that the subject of the economics
of information is a very difficult one both from a theoretical and a practical point of
view and most practitioners respond to the challenges it offers by either attempting to
ignore it, i.e. just get on with the day to day highly pressurised job, or alternatively
coping with the problem by understating its importance.
The view which practitioners often tried to assert was that relatively speaking IT
expenditure was low and should be seen as an 'act of faith' (Lincoln 1990). If this view was ever a reasonable one, it is certainly no longer the case
as IT investment has become an increasingly important part of corporate capital
expenditure.
Top management have begun to insist that much more
attention be paid to the economic aspects of information systems than ever before and this
has lead to an increasing demand for a comprehensive and reliable IT performance
evaluation.
3.
Some progress in understanding information systems
During the past decade some progress has been made
in understanding and articulating the role and function of information systems in
organisations (Keen 1985; Hirschheim and Smithson 1988; Currie 1989; Sherwood-Smith 1989;
Scriven 1991:a&b; Symons 1991; House 1993; Walsham 1993; Willcocks and Lester 1993;
Farbey et al. 1995; Remenyi et al, 1991, 1994,
1997, 1999; Strassmann 1985,1990, 1997; Ward et al 1997, Irani 1999).
Business computing is nearly 50 years old and for
most of that period this subject has been perceived as essentially a technical one. And although technical issues have frequently been
of paramount or central importance to the success of business computing, this emphasis has
been largely at the expense of a business and management understanding of information
systems and what their potential and actual benefits are likely to be.
4.
The problems with IT benefit measurement and management
The past few years has seen a considerable amount
of progress in understanding the problems underpinning the difficulties with IT investment
benefits and although no clear and simple answer has yet been expounded quite a lot of
progress has been made, especially in articulating the problems and producing conceptual
frameworks for benefit delivery (Remenyi et al 1997).
There have been four major areas which have
contributed to the problems with IT benefit measurement and management. These are:-
1.
Benefits and identifiable performance improvements
2.
The issue of information systems reach
3.
Tangible and intangible benefits
4.
Benefit evolution
4.1
Benefits and identifiable performance improvements
For information systems project success potential
benefits need to be identified as early as possible in the systems development cycle. In
fact, in an ideal world benefits would be identified and quantified before the information
systems development project began. However, although this does happen for some projects it
is seldom possible to produce a definitive statement of all the benefits that an
information systems development project will produce. In fact a high degree of success at
early benefit identification is often quite elusive.
This situation may be complicated when attempts
are made to use special IT benefit metrics. No special metrics are required. It is in fact
a red herring to measure IT investment success in terms of the utilisation of the system
or the number of users or the size of the databases or the number of times they are
accessed. This is especially obviously where measures of Web success are concerned. The
number of so called “hits” is often offered as evidence of success. However
there is not a wide understanding of how a “hit” is defined and even if there
were the question of so-what needs to be asked.
General business performance metrics such as Net Profit, Return on Investment or Net
Present Value are adequate or actually preferable for the identification and measurement
of IT benefits.
4.2
Information systems reach
Information systems even when they themselves are
simple stand alone systems often, if not usually, play an important integrating type role
in organisations. In the words of Evans and Wurster (1997), "information
is the glue that holds together the structure of all businesses".
When thought of this way information systems may
be seen as inter alia the conduit of that glue or the tracks over which the glue is laid
and business activities or processes flow. This integrating type role brings together a
number of different corporate issues, problems and resources. Even for the most straight
forward information systems applications it is never simple to understand exactly what the
results will be of bringing together information about different business issues. There
will nearly always be knock-on effects associated with the introduction of any substantial
information system especially when such a system has the effect of integrating business
processes or even simply integrating reports about business processes.
For example, a payroll system where the primary
objective is to automate a series of routine and simple clerical type tasks will
frequently be used as an interface to a human resource management application which could
include details of training, salary benchmarks, succession planning etc. Also a payroll
system may have connections with various costing systems which show actual and standard
costs, drawing on the actually amounts paid each week or month. The payroll system may
also be interfaced with staff loans accounting. Of course a payroll system will need to be
able to transfer data to the corporate general ledgers.
So a relatively simple system such as a payroll can have substantial
tentacles which penetrate into a number of different aspects of the
organisation. Clearly it is a challenge to visualise all the different
identifiable performance improvements such a system can have.
When more complex business applications are
considered such as sales order processing, production planning and control or vehicle
scheduling it becomes even more difficult to identify all the possible benefits of such
systems. The point is that information is at the heart and soul of the business and
our ability to build useful information systems directly effect the way the business
itself is or may be operated.
The importance of information is well described by
Evans and Wurster (1997) when they said:
When managers talk about the value of customer
relationships, for example, what they really mean is the proprietary information which
they have about their customers and what their customers have about the company and its
products. Brands, after all, are nothing but the information - real or imaginary,
intellectual or emotional - that consumers have in their heads about a product. And the
tools used to build brands - advertising, promotion, and even shelf space - are themselves
information or ways of delivering information.
When seen in this light the issue of being able to
identify all the benefits in advance becomes a virtually insurmountable challenge. Often
the situation is just too complex.
4.3
Tangible and intangible benefits
Some aspects of an information system may produce
hard or tangible benefits which will directly improve the performance of the firm, such as
reducing costs and will therefore be seen in the accounting number of the organisation as
an improvement in profit and perhaps in return on investment (ROI). These benefits are of
course relatively easy to identify and to quantify both in physical terms, i.e. the number
of people employed or the number of widgets used, and in financial terms, the number of
pounds or dollars saved or earned. But other aspects of this system will only create soft
or intangible benefits which will improve the general circumstances of the staff and thus
make life easier in the organisation but will not directly lead to identifiable
performance improvements and as such will not be easily seen in the accounting numbers of
the firm.
However, although difficult to be precise about
their actual value, especially in financial terms, intangible benefits can make a critical
contribution to the success of an organisation. Intangible benefits may often be
quantified by measuring instruments such as questionnaires, but it is quite difficult to
make a creditable connection between what can be measured with such devices and the impact
on the corporate financial results. This whole area of intangible benefits is one of the
major problems that makes benefit measurement and management difficult or elusive.
4.4
Benefit evolution
But there is a fourth issue which makes benefit
identification and especially early benefit identification even more elusive and that is
the propensity for benefits to evolve over time. The benefits of IT are just not stable. Some benefits dry up while other
which may originally not have been foreseen, materialise. In short when planning an IT
investment it is extremely difficult to look into the future to create a comprehensive
catalogue of potentials benefits. No matter how thoroughly the feasibility study or the
business case is produced it is usually nearly impossible to foresee all the future
ramifications of the proposed process improvement and the accompanying information
technology investment in advance. Forecasting is simply notoriously difficult and thus it
is perhaps unrealistic to expect a high degree of success at future benefit identification
to be anything other than elusive. This is
especially true in the current environment in which business is rapidly changing.
Every information system will have some easy to
identify or obvious benefits which will be sustainable over a period of time. However, as
the development project proceeds and the ramifications of the system are more fully
understood, new ideas about potential benefits will become apparent. This will have been
due to the process of creative dialogue between the principal stakeholders, which will
bring to light new business processes and practices. In short, potential benefits should
not be seen as being static, but rather actually evolve as a greater understanding is
gained of the organisation and the role which the system will play in it. Of course it is
necessary to point out that in the same way as new benefits surface during the development
project, other benefit suggestions which were originally identified may turn out to be
illusionary and not really exist.
These three issues are at the centre of why IT
benefits have been so difficult to identify and are the prime reasons why benefits and
value have been so elusive in the past.
Of course, this problem of business and management
understanding and thus of computer evaluation has not been purely limited to individual
systems. A lack of understanding has also applied to the more general area of the whole
information systems function itself. According to Lacity and Hirschheim (1995):
The problem is that meaningful measures of
departmental efficiency do not exist for IS.
Fortunately we are seeing some changes to this
unsatisfactory state of affairs. For the past decade business executives, as opposed to
information systems executives, have been demanding, by expressing their dissatisfaction
at the way in which information systems departments or functions have been operated, a new
approach to the management of information systems. The message is beginning to arrive that
information systems is an important aspect of many organisations and new ideas as to how
to manage them are well under development and a number of different approaches to this
problem are discussed here.
5.
Investment, value and economics
It is now pretty clear that the traditional
approach to establishing IT investment benefits amount to looking for them in the wrong
place. Thus one of the first issues which needs to be addressed in coming to terms with a
new approach to IT management is the fact that IT investment has no direct value in its
own right. IT investment has a potential for derived value. Furthermore it is widely
agreed that IT benefits are not directly a technology issue as such, but are to do with
business initiatives. Therefore, they need to be measured and managed by P&L people focusing on business processes and practices. The value of the IT
investment depends entirely upon the way in which it is able to make the organisation more
efficient and effective.
To understand how this actually works in an
organisation it is useful to rethink the role of information systems investment by going
back to some fundamental concepts. To use classical economic language an information
system is a capital or producer or investment good. A capital or producer or investment
good is something that is not acquired or valued for the utility it delivers by itself in
its own right. Simply, in economic terms capital goods do not have any intrinsic utility
or value in their own right, as a television set, a jacket, a meal in a fine restaurant,
listening to a guitar concerto, a tennis racket, a holiday in the sun etc do.
A capital or producer or investment good is
desired because it can be used to produce other goods and services, which in turn may
offer us utility and value such as the television set, a jacket, a meal or a holiday.
Capital or producer or investment goods are essentially tools. A bulldozer is a clear
example of a capital or producer or investment good. A bulldozer has no intrinsic value on
it's own. In fact to many individuals and organisations a bulldozer could be seen as a
huge liability as it takes up much space, is costly to move about and requires expensive
maintenance and requires a highly skilled and costly operator. It has to be clearly
understood that a bulldozer’s value is only derived as a result of its use, i.e. the
hole in the ground, the levelling of the old building or the preparing of the ground for a
new road or motorway surface. The value potential in economic terms of the bulldozer is
thus linked to the result that may be obtained by its appropriate use. The same principle applies to IT or to information systems and is
illustrated in Figure 1 below which shows a similar logic to that developed by Soh and
Markus (1995).
Figure 1: The relationship between business process and IT investment
5.1
IT and derived value
As a producer good, IT has a derived or second
order value which is realised when it is used as a component of an organisational or
business process or practice. In fact for the value of IT to be generated or realised, it
is necessary that the business process or practice to which it contributes actually
improve the effectiveness or efficiency of the enterprise. In as far as these
organisational or business processes or practices produce improvements to the business
they will, at least in the medium term, positively effect one or more of the corporate
performance variables. In turn this will show in the corporate performance indicators and
thus will be regarded as delivering value.
Quite specifically if the process innovation and
improvement which is to be supported by an IT investment is to improve productivity then
the IT investment will be judged primarily on whether that productivity improvement has
been achieved. An improvement in
productivity would mean that more goods and services are produced for the same amount of
input or that the same number of products or services are produced for less input. This is
essentially a cost or pricing issue (Handy 1998). However such a system might also improve
the quality of the products being produced and perhaps also have a positive impact on the
morale of the manufacturing workers. If this was the case then it would be appropriate to
evaluate the process innovation and improvement on all three of these variables.
On the other hand, if the process innovation and
improvement was to improve customer satisfaction then the IT investment needs be judged on
whether that has been achieved. An improvement in customer satisfaction could be measured
by some instrument such as a ServQual scale. In such a case it might not be all that
useful to try to reduce these benefits to monetary values. But nonetheless, these benefits
are clearly measurable and they can give the organisation a major competitive advantage in
the market place. However such a system might also improve the cost effectiveness of
serving customers and if this was the case then it would be appropriate to evaluate this
process innovation and improvement also in terms of its financial impact on the
organisation.
In practice it will seldom be appropriate to
evaluate a process innovation or improvement in terms of one metric alone. Thus this type
of evaluation really requires multi-metric analysis and this analysis, needs to be managed
by the principal stakeholders.
To ensure that the value of the process innovation
or improvement is fully exposed a process approach needs to be taken to its assessment.
This is similar to the process perspective suggested by researchers such as Weill (1990),
Brynjolfsson and Hitt (1995), Barua et al.
(1995), McKeen et al.,(1999) ,and Mooney et al. (1995).
Without this process perspective the realisation and the concurrent research for
the benefits is far more difficult.
At the outset of the business intervention the
process owners need to be quite specific about the their objectives and goals and these
need to be stated in a business case or a value proposition or business model. They need
to be quantified where possible and a timetable needs to be established as to when they
may realistically be expected to be achieved. The next step is to identify in some detail
the exact changes to the current procedures and practices which need to take place, and
which individuals will be effected by these changes. Then responsibility has to be
allocated for these changes taking place together with the necessary resources including
time for training etc. Finally a review mechanism needs to be established, along with a
procedure to follow if the proposed changes are not actually happening.
As a consequence of the above it is clear that IT
investment only derives its value to the organisation though its business applications.
This in turn can only be effected in the hands of the information systems principal
stakeholders and it is these individuals who need to manage the investment as well as its
evaluation. More than any other factor the success or failure of the IT investment is a
function of the skill and commitment of the information systems principal stakeholders.
6.
IT investment as an asset
The question of whether an organisation's
management of its IT resources is improved if it regards the funds which are spent on this
activity to be in the accumulation of an asset as opposed to simple being part of
recurrent expenditure, is an interesting one. It has been argued that by emphasising the
asset nature of IT investment the organisation will some how ensure that it is more
attentively managed and thus more easily produce more benefits. This argument suggests
that by labelling the IT investment as an asset more benefits will in fact be derived. There does not appear to be much ground for this
assertion. In fact, from the above it may be
argued that an information system has no intrinsic value in its own right. This is
certainly what Strassman (1990) was saying when he pointed out
a computer is worth only what it can fetch at an
auction
This type of argument espoused by Strassman
suggests that by itself an information system is nothing more than a sunk cost that has
been spent on a collection of hardware, software and communications equipment. And the cost of this ‘kit’ is normally a
very large amount indeed. In fact it may be argued that there is really no overriding
reason to see information systems as an asset, except for the fact that they are reusable i.e. not instantly consumed.
Today many personal computers and other small systems are being written off immediately
and thus do not appear in the balance sheet but are treated from an accounting point of
view merely as an operating cost.
But once the computer is successfully integrated
into a business process then the whole picture changes and to be fair to Strassman he did
recognise this in his book. Thus, it is generally agreed that an information system really
only acquires value i.e. becomes an asset in the colloquial use of the word, when it is
employed in collaboration with other resources as part of a business process or practice
that will result in the enhancement of the effectiveness or the efficiency of the
organisation. This conclusion begs the question of which business processes or practice
should be supported by IT and how should this actually happen.
7.
Processes, practices and people
Business processes or practices are made to
function by people working in groups or individuals mostly in line or profit and loss
(P&L) positions. In the private sector these people make, sell and support the products or
services for which the organisation was created. But this argument does not only apply to
profit orientated business. In the public sector governmental or not-for-profit
organisations focus on services at the national, regional or local level. It is these line
or P&L people who know what is required by their organisations to succeed. These
individuals also know how information systems can best support their private or public
sector efforts.
In effect these groups or individuals use the
information systems as tools or producer goods to achieve organisational results. It is
the efforts of these people which makes the IT investment a success or a failure.
Furthermore they intrinsically know what benefits are actually being delivered and if the
information system should actually be regarded a success.
8.
Looking for benefits and value
The main implication of this derived value of IT
notion is that the actual benefits of an IT investment cannot be perceived directly or on
their own. Only when IT is coupled with other resources, and especially the principal
stakeholders, can any benefits or value be perceived. There is no standard way of
combining IT with other resources or with people. Davenport (1997) pointed out the
importance of people in information systems success when he wrote:
Information and knowledge are quintessentially human
creations, and we will never be good at managing them unless we give people a primary
role.
Combinations of information systems, people and
other resources are entirely dependent on the context of the business process or practice
but in general unless IT is an integral part of a greater program of process innovation
and improvement is it quite unlikely that much value or benefits will be derived.
9.
Primary stakeholders
These P&L people are the primary or principal
stakeholders of the IT investment. By primary stakeholder of the IT investment is meant
the individual or group of people who have the most to gain or the most to lose if the
investment is or is not a success. The
characteristic of the principal or primary stakeholder which is of most interest is the
fact that he or she or they can directly influence the success or failure of the
information systems. Most often the principal or primary stakeholders are in fact the
user-owners and it is the user-owners who makes all the difference between success and
failure. This view is supported by Strassman (1997) when he said:-
The lack of correlation of information technology
spending with financial results has led me to conclude that it is not computers that make
the difference, but what people do with them. Elevating computerisation to the level of a
magic bullet of this civilisation is a mistake that will find correction in due course. It
leads to the diminishing of what matters the most in any enterprise: educated, committed,
and imaginative individuals working for organizations that place greater emphasis on
people than on technologies.
The recognition of these line people as the
principal or primary stakeholders in any information system is a fundamental change in approach or paradigm
shift for many organisations. In the ‘old days’ it was naturally thought that
the systems belonged to the information systems people.
Having information systems people as systems owners produced the most
unsatisfactory state of antagonism between P&L
people and IT people, and has been described as the culture gap (Grindley 1991; Townsend
1984; Dekle 1986; Butler 1985; Palmer,
1990).
This new approach described here largely
eliminates that culture gap. It is however important to point out that this does not in
any way diminish the contribution of the information systems professional to the
successful use of business computing. It simply changes the locus of responsibility for
the IT investment decision and the locus of responsibility for ensuring that the new
business process is a success.
10.
The locus of responsibility
Placing the principal or primary stakeholders at
the centre of the information systems investment does indeed reposition the locus of
responsibility for the success of the information system and put it squarely where it
should be with the line mangers and user-owners. There are several reasons why the
user-owners need to be centre stage in any information systems investment but by far the
most important is that by so doing the chances of the information systems delivering the
type of support which is required by the business process or practice, i.e. being relevant
are substantially increased. The problems which arise when the user-owners are not
regarded as the primary stakeholders are well articulated by Davenport (1997) who said
when talking as an information systems professional:
We have spent a great deal of time and money bringing
water to the horse, but we don’t even know if he is thirsty, and we have no idea how
to get him to drink.
10.1
The user-owner - not the only
stakeholder
But the user-owners are not the only stakeholders
in an information systems investment. The group of IT professionals who will work with the
technical development of the information systems are clearly stakeholders of some
considerable importance. They supply the IT expertise which will make the technology
aspects of the new processes work. Traditionally in-house IT professionals have accepted a
large part of the responsibility for the success of the IT investment. It was not uncommon
for IT professionals to develop information systems for their so-called end-users.
Sometimes this was done without adequate consultation, as IT professionals have been known
to believe that they knew what the user requirements were, at least as well as the users
themselves. Clearly this was not very
satisfactory, and as mentioned above, there have been problems of communications between
IT professionals and users, as well as the development of what is sometimes referred to as
the culture gap. Increasingly it is thought
that the users-owners need to play a greater role in ensuring the success of the IT
investment.
However the IT professional still has a totally
indispensable role to play in any IT investment project. The IT professional should be
seen as a critical adviser to the users/owners who will ensure that the appropriate
technology is acquired and employed. The role of the IT professional has also been
complicated by the fact that some organisations have outsourced the supply of IT
expertise.
Outsourcing has been a familiar aspect of the
supply of IT capabilities and competencies in many organisations over the past years. Few
organisations have never used contractors or from time to time employed consultants.
However it has only been in recent years that organisations have outsourced all, or the
major part of the IT operation. Today organisations increasingly use a portfolio of IT
expertise, which includes both internal and external people and organisations. All these
sources of IT expertise may be stakeholders in their own right and are shown in Figure 2.
Figure 2: The more usual sources
of IT expertise
In fact there are usually several of these groups
involved as stakeholders in any given IT investment.
The third group of principal or primary
stakeholders is the financial managers and administrators. Financial managers and
administrators are always stakeholders in any corporate investment as they are
instrumental in making the funds available for the purchase of the equipment, etc.
Financial managers and administrators will arrange the contracts and ensure that goods are
received and that payments are made, etc.
Financial managers and administrators are often
involved with the detail of the business case accounting, as users-owners may not be
familiar with the costing approaches required. IT investments which are made to improve
business processes and practices will often affect the internal controls within the
organisation, and for that reason both internal and external auditors may be required to
advise on the propriety of the new proposals. In addition, investments often have to be
audited and this will require further involvement from auditors.
Figure 3 lists some of the stakeholders that fall
into this category.
Figure 3: Some of the financial managers and
administrator stakeholders
Understanding
the importance of having the full commitment of these three sets of primary stakeholders
and having them work closely together is an important key to IT investment benefit
realisation (Remenyi et al 1997). In fact the project management teams needs to be able to
draw on the expertise of all three sets of stakeholders if the project is to be
successfully implemented. Figure 4 shows how the project management team needs to be
assembled.
Figure4: The Project team needs to
draw on expertise from all three of the stakeholder sets.
10.2
Re-focus the traditional role of the IT professional
Thus the traditional role of the information
systems professional needs to be re-focused. They need to become primarily advisors and
educators. However the information systems professionals, of course, do not lose all their
action-orientated role of doers, as they still need to play a role in making the
technology work. But information systems professionals should not try to initiate the
innovative processes and practices that are responsible for the benefit creation and
delivery. Also the information systems professionals should not be responsible for
identifying benefits or justifying the expenditure on the systems. The business case for
information systems development needs to be created by the line manger, maybe with the
help of the other principal stakeholders. who will use the system to improve his or her
personal or group efficiency and effectiveness.
11.
Summary and conclusions
The way forward in reducing the degree to which IT
investment benefits have been elusive requires the recognition that IT investment needs to
be an integral part of a greater program of process innovation and improvement. The
success of the IT investment is then tightly coupled with the success of that process
innovation and improvement. In fact, the IT investment cannot be assessed or evaluated
independently of that process innovation.
If the process innovation and improvement was to
improve productivity then the IT investment will be judged on whether that has been
achieved. On the other hand, if the process innovation and improvement was to increase
customer satisfaction then the IT investment needs be judged on whether that has been
achieved.
It is also necessary to accept that some IT
investment benefits cannot be satisfactorily stated in monetary terms. A different type of
business rationality is involved. Nonetheless they are real business benefits and need to
be taken into account in any development of any investment evaluation equation.
Having established the process innovation and
improvement element of an IT investment it then follows that IT professionals may not be
the most appropriate individuals to initiate or lead such projects. The principal
stakeholders of these IT enabled or even IT driven process improvements need to be a
P&L manager who is at the same time the information system user-owner. Perhaps more
than any other factor the success or failure of the IT investment, rests with the skill and commitment of the
information systems principal stakeholders.
It is important to recognise the fact that IT
investment benefits have been difficult to identify because of the issue of information
systems reach, the nature of tangible versus intangible benefits, and the question of
benefit evolution. A process approach is required to both the delivery and the assessment
of IT benefits.
Finally the locus of responsibility issue needs to
be clearly focused if IT benefits are to be identified and evaluated.
Of course, the work in developing a comprehensive
approach to the identification and the
management of IT investment benefit delivery is not complete and is unlikely ever to be
so. In the words of Checkland (1986) writing about systems thinking:
‘Obviously the work is not finished, and can
never be finished. There are no absolute positions to be reached in the attempt by men to
understand the world in which they find themselves: new experience may in the future
refute present conjectures. So the work itself must be regarded as an on-going system of a
particular kind: A learning system which will continue to develop ideas, to test them out
in practice, and to learn from the experience gained.’
However it is possible to
say that some considerable progress has been achieved in understanding the issues involved
with the identification, the evaluation and
the management of IT investment benefits and
that some frameworks have been developed which can improve the ability of organisations to
management IT investment benefits.
References
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Barua,
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An analytical and empirical investigation, Information
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Brynjolfsson,
E, (1993) “The Productivity Paradox of Information Technology: Review and Assessment”, Communications of the ACM, December.
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Brynjolfsson,
E. and L. Hitt (1995) Information technology as a factor of production: The role of
differences among firms, Economics of Innovation
and New Technology, 3 (4).
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Biographical
details of author
Dan Remenyi
is a Visiting Professor at Brunel University and a management consultant based in the
United Kingdom working worldwide. He is also an associate member of faculty at Henley
Management College.
Professor Remenyi started his education in
economics and political science by obtaining a B Soc Sc before going into business. After
a few years business experience, he completed a masters of business administration (MBA)
and then joined the information systems industry and worked in a number of different
capacities. Eventually he returned to academe, reading for a doctorate in management (PhD)
and completing the degree in 1990.
Since obtaining his PhD, Dan Remenyi has
specialised in the area of the formulation and the implementation of process improvement
strategies supported by information systems and how to evaluate the performance of these
and other systems. In addition, he is involved in research and consulting in matters
related to knowledge enhanced process management and creating knowledge oriented
organisations. He has had published a number of books in information systems management.
His most recent books on information systems management, published by John Wiley and
Butterworth Heinemann respectively are called Achieving
Maximum Value from Information Systems - A Process Approach, and Stop IT Project Failure through Risk Management and
IT Investment Making a Business Case. These
books introduce a new approach to managing the use and implementation of complex
transformation type projects. He regularly conducts management seminars and briefings for
both senior and operational management on how to use the information systems resource to
make their organisations more efficient and effective, as well as to give themselves a
competitive advantage.
Dr Dan Remenyi has spent more than 25 years
working as a management consultant in areas related to the effective implementation of
corporate performance improvements based on information technology. His work in this field
began during his time with IBM, with Barclays Bank and Barclays Merchant Bank and with the
management consultants, Turquand Young and Layton-Bennett (subsequently merged and
eventually became part of Ernst and Young). In recent years he has worked for clients such
as Mars Confectionery, FI Group, Caterpillar Division of Barlows, Andersen Consulting,
National Health Services in the United Kingdom, Ernst & Young, Spoornet (the national
railroad company of South Africa), Liberty Life Insurance Company, Anglo-Vaal Mining
Corporation, ABSA and First National Bank.
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