Deriving Business Value from IT Applications in Product Development: A Complementarities-Based Model - Information Technology and Product Development - page 39

Table 2.3 (continued)

How the practice reinforces
relationships Practice Examples from the Cisco case

knowledge and skill down to line
workers that was once the sole
preserve of senior managers and
by allowing monitoring of
decision quality by senior
managers.

relevant corporate and industry
information to their desktops,
including live broadcasts of the
CEO's address to Cisco's
Quarterly Meeting.

Improved vertical and
lateral information
flow

Reinforcement of IT deployment
⇒

Cisco's web-enabled architecture
calls for a one-to-one ratio of
networked PCs to employees.
The above-mentioned “digital
dashboards” and “my Yahoo”
pages reinforce information
flows up and down the
organization. Cisco's online
directory, which gets millions of
hits per year, promotes vertical
and lateral communications.

business value:
Increased information flow makes
organizations more responsive to
changing conditions. IT enables
more efficient and effective
information flow, thus
reinforcing the positive impact
of any given level of information
flow on business value.

Strong
performance-based
incentives

Reinforcement of IT investment ⇒ Cisco uses its web-enabled

architecture to track individual
performance, to give broad
access to performance
information, such as sales and
customer satisfaction, and to
allow employees to measure
their performance against
company goals. Seventy percent
of the employees have a very
significant bonus related to
annual customer surveys.

IT deployment:
Workers with performance-based
incentives will be more willing
to adopt new IT tools that could
enhance their performance.
Reinforcement of IT deployment
⇒ business value:
Performance-based incentives are
the optimal motivational tool,
but only when based on accurate
information about performance.
Modern IT automatically
captures raw data related to
performance as workers use it to
perform their jobs. Thus,
performance data can be
captured more accurately and
efficiently.

Finally, they will also recognize when their organizational architecture includes
the kinds of modern elements that support - and are supported by - greater IT use
and provide added impetus to IT investment decisions. In short, we argue that the
very recognition of complementary organizational elements may shape or drive the
decisions regarding IT investments in the firm. This rationale leads to our final set
of propositions:

Proposition 5a: Organizations that have business strategies that possess greater
potential complementarities with IT use will have higher levels of IT investment.