Deriving Business Value from IT Applications in Product Development: A Complementarities-Based Model - Information Technology and Product Development - page 36

Table 2.2 (continued)

Type of IT
asset

How the asset reinforces
relationships Examples from the Cisco case

Reinforcement of IT deployment
⇒ business value:
When strong relations exist there
will be free flow of information
about how well systems are
suiting user needs. In this
climate, necessary fixes and
improvements are more likely,
rather than users suffering along
with inadequate systems or
avoiding use of systems entirely.
Also users are more likely to
understand how best to use
systems as they are.

During Cisco's ERP
implementation they took the
unprecedented step of
reassigning 80 of their “best and
brightest” to work full time on
the implementation. CEO
Chambers made clear his
support for the implementation
by including successful
completion of the project as one
of the corporation's top seven
objectives for the year.

As explained in Table 2.2, each of these assets has complementarities with IT
investment and deployment. However, they also reinforce one another, suggesting a
system of complements. Ross and Beath note that

[T]he relationship asset is heavily dependent on mutual respect, which means that business
partners must view the IT staff as competent (human asset), which is partly dependent on
the quality and cost of the existing technology base (technology asset). At the same time,
competent IT staff members can develop a strong technology infrastructure only if business
partners accept some accountability for IT projects (relationship asset) and top management
provides sufficient investment for constant reskilling of the IT staff (human asset). The
architecture is valuable only if it supports business needs, as articulated by senior business
managers (relationship asset), and is effectively and efficiently managed by competent IT
staff (human asset). (Ross & Beath, p. 35)

2.6.4 Modern Organizational Architecture

Organizational architecture refers to a firm's organization of labor and related
human resource practices (Hitt & Brynjolfsson, 1997). Considerable prior work has
examined the question of how certain aspects of modern organizational architectures
might complement technology and innovation (Bresnahan et al., 2002; Brynjolfsson
& Hitt, 2003; Hitt & Brynjolfsson, 1997; Laursen & Foss, 2003; Milgrom &
Roberts, 1995). In this section, we adopt a typology offered by Brynjolfsson (2003)
for a set of practices that comprise the “digital” organization.
This typology, based on decade of empirical studies in this area, identifies a col-
lection of five elements 1 of modern organizational architectures that complement IT

1 Brynjolfsson's (2003) typology identifies six factors, but for brevity we combine two closely
related factors - skilled labor, and an emphasis on recruitment and training, into a single
factor.