Deriving Business Value from IT Applications in Product Development: A Complementarities-Based Model - Information Technology and Product Development - page 34

provide a more systematic measure of what constitutes IT capabilities (Bharadwaj
Sambamurthy, & Zmud, 1999; Wade & Hulland, 2004).
For the purpose of this discussion, we adopt the typology proposed by Ross and
Beath (1996), who argue that IT capabilities ultimately derive from strong posi-
tions on three types of IT assets: human, technical, and relationship. They define IT
capability as “the ability to control IT-related costs, deliver systems when needed,
and effect business objectives through IT implementations” (p. 31). Ross and Beath
define the assets that enable this capability as follows:

•

The technology asset refers to shareability of technical platforms and databases.
Two distinguishing characteristics of a valuable technology asset are well-defined
technology architecture, data, and platform standards.

• The human asset refers to the ability of the IT staff to consistently solve business

problems and addresses business opportunities through IT. Three distinguishing
features of valuable IT human assets are technical skills, business understanding,
and a problem-solving orientation.

• The relationship asset refers to the extent that IT and business unit management

share the risk and the responsibility for the effective application of IT in the firm.
A valuable relationship asset is distinguished by business partner ownership of
IT projects and top management leadership in establishing IT priorities.

At the most abstract level, it is nearly self-evident that firms with stronger IT
capabilities would be better able to translate any given level of investment into
more thorough IT deployment (suggesting complementarity with IT investment)
and would be better able to translate any given level of IT deployment into greater
business value (suggesting complementarity with IT deployment). In fact, the three
parts of Ross and Beath's definition go to these exact points. Firms that have greater
ability to “deliver systems when needed” will, other things equal, be better able to
convert IT investment into higher levels of deployment. Firms that are “better able
to control costs” and “effect business objectives through IT implementations” will
find that any given level of IT deployment will cost less and will be more likely to
operate IT in a way that produces business value.
This suggests the following two propositions:
Proposition 3a: The effects of IT innovation deployment on business value will be
reinforced by stronger IT capabilities.
Proposition 3b: The effects of IT investment on IT innovation deployment will be
reinforced by stronger IT capabilities.
To further develop the rationales in support of these two propositions, we exam-
ine more fine-grained complementarities involving each of the three assets that
underlie strong IT capabilities, namely technology, human, and relationship assets.
In Table 2.2, we provide a rationale for how each asset reinforces the IT invest-
ment

business value
relationship. We illustrate these rationales with examples taken from Cisco Systems,
particularly the account of Cisco's ERP implementation (Austin et al., 2002).

⇒ IT deployment relationship and the IT deployment ⇒