Information Technology Reference
In-Depth Information
Table 2.1
Measuring IT investment, deployment, and business value
Construct
Definition
Measures
IT investment Extent of IT investment
has traditionally been
defined as actual
capital expenditures on
IT hardware (and
sometimes, also
software and/or labor).
We depart from this
practice and define the
extent of investment in
terms of timing,
commitment, and
scope.
We propose three measures for this construct:
(a) Investment timing: Organizations that make earlier
investments can be viewed as investing more
aggressively. Also, early vintages of a technology
are generally more complex and less mature, and so
cost more to implement.
(b) Organizational commitment to deployment:
Organizations that are more certain in their intention
to deploy a technology can be viewed as more
aggressive than those that are less committed.
(c) Intended scope of deployment: This captures the
intended breadth and depth of deployment.
Organizations that aim for a greater scope of
deployment can be viewed as making more
aggressive investments.
IT innovation
deployment
IT innovation
deployment refers to
the extent to which the
IT artifacts comprising
the innovation have
been implemented
throughout the
receiving organization
in a complete and
sophisticated way
We propose two sub-dimensions of IT deployment:
Breadth of deployment refers to pervasiveness of
technology use in the organization and could be
measured as the frequency and extent of technology
use across whatever organizational units are most
relevant given the nature of the technology (e.g.,
across people, groups, projects, tasks, and process
stages).
Depth of deployment refers to the quality of
technology use within an organization and could be
measured as the number and sophistication of
functions in use, the number of inputs/outputs
covered by the system, or the variety of information
contained with in it.
IT-enabled
business
value
Business value
researchers have
divided IT-enabled
business value into two
broad categories:
business process level
value and firm-level
value. Process level
measures are specific
to the processes
affected by the
particular IT in
question, while
firm-level measures
transcend any given
process or business
function.
Measuring process level value requires that the
affected business process be identified. Using new
process development (NPD) as an example process,
these measures could include the following:
Return on investment
Reduced NPD cycle time and costs
Increased speed of requirements and specification
changes
Increased NPD project performance
Increased new product performance
Increased product-market fit
Increased number of products, services, or businesses
launched in a period
Increased percent of revenues from new products in a
period
Firm-level measures are not specific to a particular
business process. Possible measures include the
following:
Improved relative performance on firm-level
accounting profit (e.g., ROA, ROS) or cost (e.g.,
COGS, SGA).
Improved relative growth of sales or market share
Increased market value or Tobin's Q
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