how does it contribute value to the business
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How does IT contribute value to the business? An exploratory study to investigate the components and metrics involved with appraising, generating, and sustaining IT business value
Thesis submitted in partial fulfilment of the requirements
for the degree of Master of Arts in Management
By Bruce Robert Duthie
University of Durham, UK Durham Business School
Submitted December 2009 All rights reserved. This work
may not be reproduced in whole or in part, by photocopy or other means, without
written author’s permission.
B. Duthie Page 2
This dissertation is the result of my own work. Material from the published or
unpublished work of others, which is referred to in the dissertation, is credited to
the author in question in the text. The dissertation is 12,000 words in length.
Research ethics issues have been considered and handled appropriately within the
Durham Business School guidelines and procedures.
B. Duthie Page 3
Abstract
The focus of this exploratory research is to investigate the components and metrics involved
with appraising, generating, and sustaining IT business value. Literature reviewed determined
key components involved in appraising and generating IT business value. Using a self-selected
sample population, an Internet-mediated survey was distributed to 81 professionals previously
involved in strategic IT accountabilities. The questionnaire was divided into four key domains.
The results suggest firms appear to be adopting a process for strategically evaluating and
prioritising IT investments; however intangible areas appear to be less adopted. A notable gap
between appraisal and value-realisation metrics was recorded. Strategic project management
appears to be supporting IT business value-generation and potentially becoming a source of
competitive advantage. Tactical capabilities such as business process improvement and efficient
production support were reported to be more prevalent than strategic capabilities. Firms
operating at the highest level IT maturity indicated linkage to contributing to certain key
metrics for IT business value. Finally, the business operating model architecture appeared to
have little influence on the metrics for appraising and/or realising IT business value.
Future research is suggested to focus on aligning metrics throughout the business value-
generation stages, exploring influence of industry type, corporate culture and structure, and
the incorporation of talent management to drive IT business value. These areas support the
continual and ongoing need to provide strong evidence to evolve the theoretical discipline and
practice for generating IT business value.
B. Duthie Page 4
Table of Contents
Acknowledgements ......................................................................................................................... 9
1.0 Introduction ............................................................................................................................ 11
1.1 The Thesis............................................................................................................................ 11
1.2 Purpose ............................................................................................................................... 11
1.3 Research Aims ..................................................................................................................... 11
1.4 Research Questions and Objectives.................................................................................... 12
1.5 The Business Problem ......................................................................................................... 13
1.6 Significance of the Study ..................................................................................................... 13
1.7 Background ......................................................................................................................... 14
1.8 Current research and pioneering models ........................................................................... 17
1.9 External research rationale ................................................................................................. 18
1.10 Research structure ............................................................................................................ 19
2.0 Literature Review .................................................................................................................... 20
2.1 Theoretical Background ...................................................................................................... 22
2.1.1 Competitive strategy .................................................................................................... 22
2.1.2 Strategic-necessity hypothesis..................................................................................... 23
2.1.3 Resource-based view ................................................................................................... 23
2.1.4 Summary of relevant areas of focus for each strategic framework ................................ 24
2.2 IT Business Value: Appraisal process, metrics, and realisation .......................................... 26
2.2.1 The IT business case process and metrics to appraise IT investment opportunities ...... 26
2.2.2 The IT business value realisation metrics ........................................................................ 27
2.2.3 Summary of IT business value-appraisal and value-generation metrics ......................... 28
2.3 IT Strategic Execution.......................................................................................................... 30
2.4 IT Capabilities to contribute and sustain business value .................................................... 34
2.4.1 Outside-in capabilities ................................................................................................. 35
2.4.2 Spanning capabilities ................................................................................................... 35
2.4.3 Inside-out capabilities .................................................................................................. 35
2.4.4 Capability Maturity Model ........................................................................................... 36
2.5 Relationship between IT and the Business Model .............................................................. 38
2.6 Synthesis of theory, the IT business case, business models, business value, IT execution, and capabilities ......................................................................................................................... 41
3.0 Methodology ........................................................................................................................... 42
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3.1 Research Strategy ............................................................................................................... 42
3.2 Research Objective and Research Strategy and Alignment with Literature Review .......... 43
3.3 Survey questionnaire .......................................................................................................... 44
3.3.1 Sample population ....................................................................................................... 44
3.3.2 Survey Design ............................................................................................................... 45
3.3.3 Data analysis ................................................................................................................ 47
3.4 Methodological strengths and limitations of the research design ..................................... 47
3.4.1 Strengths ...................................................................................................................... 47
3.4.2 Weaknesses ................................................................................................................. 48
4.0 Results and Discussion ............................................................................................................ 49
4.1 Survey response rate .......................................................................................................... 49
4.1.1 Firm Characteristics ..................................................................................................... 49
Firm Size and Industry ........................................................................................................... 49
Respondent’s Role ................................................................................................................. 50
4.2 Research Question 1: What are the processes and metrics used to appraise IT business value investments? ................................................................................................................... 50
4.2.1 The IT business value-appraisal processes ...................................................................... 50
4.2.2 The IT business value-appraisal metrics .......................................................................... 51
4.4 Research Question 3: What role does IT strategic execution play in delivering business case objectives? ........................................................................................................................ 59
4.5 Research Question 4a: What strategic capabilities play a role in delivering IT business value? ........................................................................................................................................ 62
4.6 Research Question 4b: Does level of IT maturity influence IT business value? ................. 64
4.7 Research Question 5: Does the firms’ business model influence how IT contributes to business value? ......................................................................................................................... 66
4.8 Summary of Results ............................................................................................................ 69
4.9 Final synthesis of results ..................................................................................................... 74
5.0 Conclusions and Recommendations ....................................................................................... 75
5.1 Alignment between the IT business case and IT value generation metrics ....................... 75
5.2 IT strategic project execution’s role in contributing to IT business value .......................... 77
5.3 Specific capabilities that may influence a firm’s ability to generate IT business value ...... 78
5.4 How the operating business model of the firm influences IT business value: ................... 79
5.5 Final comments ................................................................................................................... 80
6.0 References .............................................................................................................................. 82
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7.0 APPENDIX A: Research Ethics Flowchart and Questionnaire ............................................... 100
8.0 APPENDIX B: Survey Questionnaire ...................................................................................... 106
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List of Figures
Figure 1. Generic IT Strategic Alignment Model ........................................................................... 17
Figure 2. The NTPC model to Project Management...................................................................... 32
Figure 3. Software Capability Maturity Mode. ............................................................................. 36
Figure 4. The Volume-Operations Model ...................................................................................... 40
Figure 5. The Complex-Systems Mode. ......................................................................................... 40
Figure 6. High-level research taxonomy ....................................................................................... 43
Figure 7. Metrics to establish the IT business case ....................................................................... 51
Figure 8. Capabilities aligned with scenario planning and predictive indicator analysis. ............ 53
Figure 9. IT business value-realisation metrics. ............................................................................ 55
Figure 10.Metrics used to assess impact of IT investment to business value. .............................. 56
Figure 11. Results for firms applying the NTCP project framing technique. ................................. 59
Figure 12. Operating business model survey responses. .............................................................. 66
Figure 14. Business Model and Business Value Metrics. .............................................................. 67
Figure 15. IT Business Value and Business Model comparison. .................................................... 68
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List of Tables
Table 1. IT Value Chain activities and impact. .............................................................................. 22
Table 2. Balanced scorecard approach for cataloguing IT business value-appraisal and value-
generation metrics. ....................................................................................................................... 29
Table 3. The components of execution that appear to play a significant role in the outcome of IT
projects and subsequent business value ....................................................................................... 33
Table 4. Summary of IT capabilities: Strategic, tactical, and maturity related to IT business value.
....................................................................................................................................................... 37
Table 5. Linkage between research questionnaire and research questions and objectives. ........ 46
Table 6. Prioritisation of IT business cases adopted by sample population ................................. 50
Table 7. Summary of value-appraisal and value-generation benefits and metrics. ..................... 58
Table 8. Areas of project synthesis and transition adopted by sample population. ..................... 60
Table 9. IT capabilities. Summary of survey responses demonstrating the adoption of strategic
and tactical capabilities. ............................................................................................................... 62
Table 10. IT maturity results within the sample population. ........................................................ 64
Table 11. Percentage of firms adopting specific operating business model traits. ...................... 67
Table 12. Summary of survey responses compared to best practice components. ...................... 74
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Acknowledgements
This research was possible because of the commitment, genuine support, advice, and guidance
of many people. I am especially thankful to the following individuals: Mr. David Faulder, my
research supervisor, for his dedication, direction, insights, and enthusiasm throughout the
duration of the thesis; Mr. Iraj Pourian and Ms. Sheila Baker, my current bosses for their
patience, input, and real understanding of the importance for learning and expanding as an
individual; Mr. Paul Wagler for his tremendous mentorship and insightful discussions to help
construct a practical study; Mr. Piotr Tymkow for his early assessment of the research
questionnaire; Ms. Catherine Meleady for late stage reviews. I would also like to thank all those
that took time to complete and submit the research survey.
I am grateful for my colleagues at Coast Capital Savings for the encouragement, great practical
discussions to help link theory and practice, and most importantly, their friendships.
My special gratitude goes to my parents, Lance and Sylvia Duthie, for their unconditional
support, love, and assistance they have provided throughout my graduate studies.
To my beautiful young children, Madeline and Parker, I thank you for your patience,
acceptance, and understanding throughout my long hours in front of the computer.
To my stunning and adored wife, Ms. Lisa Duthie, your patience and sacrifices made this thesis
a reality. You were the backbone and emotional inspiration I needed throughout. I love you.
B. Duthie Page 10
To my wife Lisa,
My one and only true love.
B. Duthie Page 11
1.0 Introduction
1.1 The Thesis:
1.2 Purpose
The focus of this exploratory research is to investigate the components and metrics involved
with appraising, generating, and sustaining IT business value. The research will also seek to
identify connections with known theory to expand the evidence for improving the
understanding of IT factors related to achieving business value. Finally, the research will provide
recommendations for further research to enhance the academic and practical knowledge of
how IT contributes to business value.
1.3 Research Aim
The aim of this research is to investigate the critical factors, metrics, and components of IT
strategy and execution that generate value to improve organisational performance. As IT is
becoming a more strategic dimension for all industries, companies, and business models, this
shift requires a more integrated view of IT than researched during previous decades (Huang et
al., 2009). Based on this trend, the current study is important to advance perspectives and pose
questions to help practitioners and researchers focus on the most relevant components of IT to
The thesis of the current study is to explore and develop a deeper understanding of the components and metrics relevant for appraising, generating and sustaining IT business value. The domains explored concentrate on the theoretical background of IT strategy, the process, metrics, and factors involved with the IT business case, and the relevance of business model,
execution, and strategic capabilities.
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enable business value. To establish focus on this wide-spanning topic, the scope of this
exploratory project is contained and divided in the following way:
Theoretical business and IT strategic framework assessment
IT business case and value generation metrics defined
IT execution components critically appraised
Aligning IT execution with firm capabilities and operating business model.
1.4 Research Questions and Objectives
To address this business challenge for maximising IT value, the research concentrates on the
following questions:
1. What are the metrics and process used to develop the IT business case?
2. What are the benefits and metrics used to assess IT business value generation?
3. What role does IT strategic execution play in improving IT business value?
4. What IT capabilities influence and/or improve IT business value?
5. Does a firm’s business model influence how IT contributes to business value?
The objectives are to investigate:
1. Alignment between the IT business case and IT value generation metrics;
2. IT strategic project execution’s role in contributing to IT business value;
3. Specific capabilities that may influence a firm’s ability to generate IT business value;
4. If the operating business model of the firm influences IT business value; and
5. Areas for future exploration in the quest to contribute to the development of IT
business value theory and practice.
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1.5 The Business Problem:
“There’s a fundamental difference between managing an information system and running an
information ecology, just as there’s a difference between operating a grape press and making
wine.” – Michael Schrage, Harvard Business Review, 1997.
Historical and ongoing studies of information technology and its relation to firm performance
are abundant and have evolved the disciplines of the resource-based and competitive views of
strategy (Barley, 1990; Porter and Millar, 1985; Barney, 1991). In result, several frameworks
within the discipline of IT have emerged for categorising, assessing, and building the right IT
structure and capabilities to align with overall strategic objectives (Denison and Mishra, 1995).
Despite the contributions to both the theory and practice of management, an underlying gap
still exists in exploring the components and activities required to achieve maximum IT business
value (Kauffman and Weill, 1989). Without this understanding of how to assess, determine, and
implement the optimal IT strategy and capabilities across a given firm, achieving maximal IT
business value may continue to fall short of its true potential.
1.6 Significance of the Study
Despite the depth and breadth of studies investigating the relationship between IT and
business results, evidence suggests many firms continue to face challenges with understanding
how to consistently achieve IT business value (Bharadwaj, 2000). As the scope of the research is
relatively modest and time-bound, any insight into this potential phenomenon will be
descriptive and qualitative. In this case, the research hopes to inspire further direction along
this line of research for both practical and theoretical advances.
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1.7 Background
Information technology has evolved into a role for businesses that is analogous to a keystone
species in nature. Specifically, not only can its presence alter the internal workings of its firm
but it also helps define and influence the entire industry which it inhabits (Porter and Millar,
1985; Drucker, 1998; Hughes et al., 2006). More importantly, if IT were removed from the
environment, the fundamental and defining characteristics of the entire business system would
shift to a state radically different from its original form (Porter and Millar, 1985; Gunasekaran et
al., 2001; Orlikowski and Robey, 1991). Simply put, IT is so deeply woven into the fabric of
modern business that it has become an vital building block to the domains of strategy,
execution, and operations.
Based on the pivotal role IT plays in today’s business environment, there is increasing pressure
for managers and executives – both technical and non-technical – to engage in IT projects to
enable dramatic improvements in business productivity, firm profitability, employee
engagement, and customer satisfaction (Pricewaterhouse Coopers, 2009). These “renewal”
objectives generally aim toward socialising information processing, exploiting competitive
opportunities through low-cost, high-value distribution channels, and enabling organisational
synergy (Sethi and King, 1994; Kim and Mauborgne, 2005). The motivation for these extensive
IT changes is typically based on: 1) replacing disparate, high cost, low-value legacy systems, 2)
implementing new information technology to remain competitive, or 3) becoming an early
adopter of a breakthrough concept with the hope of improving competitive advantage
(Forrester Research, 2007).
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Despite the well-intended reasons for embarking on IT-driven renewal projects, numerous
examples still report that firms struggle or even fail to realise IT business value (Whittaker,
1999; Schrage, 1997; Bharadwaj, 2000; Matta and Ashkenas, 2003). Research suggests these
failed initiatives can be related to the narrow focus for achieving business and IT strategic
alignment, poor project planning, weak business cases for the project plan, and lack of
management involvement and support (Whittaker, 1999; Shpilberg et al., 2007; Orlikowski and
Robey, 1991).
Conversely, other research has empirically demonstrated improvement in firm performance
through IT contributions. These improvements correlate, in part, with the extent to which IT
supports and enhances a firm’s core competences (Feeny and Willcocks, 1998). Specifically,
resources such as a flexible IT infrastructure, skilled personnel, and effective internal and
external partnerships can be a source of competitive advantage (Galliers, 1999; Ravichandran
and Lertwonsatien, 2002; Brynjolfsson and Hitt, 2000; Doherty and Terry, 2009). In addition,
the seminal work conducted by Brynjolfsson and Hitt (1998) generated a more precise level of
understanding of the tangible and intangible IT benefits to quality, customer satisfaction, and
convenience. Interestingly, the benefits would often vary from company to company
suggesting IT business value is largely due to the unique characteristics of the firm – i.e. what
goes on within the firm has considerable impact on the output of IT investments (Ibid.).
Mixed empirical and anecdotal evidence is a great invitation for further analysis. As such, a
logical step forward is to seek further evidence to improve the understanding of the activities,
relationships, and metrics involved with appraising, achieving, and sustaining IT business value.
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Many studies and frameworks have established a well-designed foundation in which to advance
(Porter and Millar, 1985; Earl, 2009; Brynjolfsson and Hitt, 1998; Carr, 2007; Lederer and Sethi,
2009; Krell and Matook, 2009; Ross and Beath, 2002; Kauffman and Weill, 1989; Forrester,
2007; Dawson and Wang, 2009). These existing studies will continue to serve as an exceptional
playbook to better understand how IT can contribute to sustainable firm success. This is the
focus of the current study.
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1.8 Current research and pioneering models
Numerous models exist to help practitioners and researchers improve the likelihood of realising
IT business value. In review of these models, common denominators of strategy and operations
are broken down into external and internal levels (Henderson and Venkatraman, 1993). The
components and relationships of these levels are outlined in Figure 1.
Figure 1. Generic IT Strategic Alignment Model
Despite these common components, substantive differences exist between various IT business
value frameworks. The differences are primarily based on the unit of analysis explored. For
example, some studies focus on industry-level evidence, whilst others concentrate on firm,
process, execution capabilities, and even project level impacts between IT and firm value (Sethi
and King, 1994). In addition, few studies link the underpinning business model of the firm to IT
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activities and their potential for contributing to business value (Moore, 2005; Lucas and Goh,
2009). Accordingly, a generalised IT value proposition framework may serve as a good starting
point for further development, yet will likely pose limitations to validate and apply in theory
and practice, respectively.
1.9 External research rationale
The compelling rationale to study and further explore components, metrics, and factors that
contribute to IT business value is that IT is increasingly integrated into overall business strategy,
and is required to help achieve business goals in the following ways (Davenport and Harris,
2007; Forrester Research, 2006; Jeffrey and Leliveld, 2004):
1) Improved analytical capabilities through scenario planning
2) Developing road maps focusing on products, technologies, and customer requirements
3) Boosting IT agility and risk-resiliency
4) Providing ongoing skills development
5) Improving process efficiencies and effectiveness in a distributed manner
6) De-centralizing decision making and empowering employees
7) Continuously reducing costs.
These trends suggest firms will continue to rely on information technology – both its strategy
and execution - as a means of maintaining relevance and competitiveness.
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1.10 Research structure
Using a multi-method research approach, the structure of the research is divided as follows:
1. In-depth literature review to establish the existing frameworks related to strategy,
execution, capabilities, and business models that may influence IT business value
2. Construction of the research strategy, design, methodology, and questionnaire
deployment
3. Assessment of the research questions to identify potential trends, and
4. Synthesis of the literature review and questionnaire findings to address research
objectives through specific conclusions and recommendations for future research.
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2.0 Literature Review
The literature review is divided into five parts: 1) determining theoretical foundation for the
current research, 2) defining IT business value, 3) evaluating and assessing existing factors
related to the IT business case, execution, and strategic capabilities, 4) evaluating current
theory related to the connection between operating business models and IT business value, and
5) synthesising known research into key domains to be used in the quantitative section of the
research.
Specifically, the first part briefly examines the theoretical relationship between business and IT.
This section considers competitive, strategic necessity, as well as resource-based views of
strategy as they relate to information technology.
The second part reviews the meaning and measures of IT business value, the common
components that influence IT business value, and tries to establish linkage between IT business
value and competitive advantage. The focus of this section will be based on:
1. Historical trends and field evidence to generate a common understanding of IT business
value;
2. Identifying common appraisal metrics and components of the IT business case; and
3. Identifying common metrics for assessing and monitoring IT business value realisation.
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The third and fourth parts of the literature review focuses explicitly on how firms execute IT
strategy to achieve business value. Specific factors will include:
1. IT strategic execution,
2. Relevant IT capabilities, practices, and core competences in which contribute business
value; and
3. Assessing the relationship between the operating business model and IT business value
appraisal and generation.
The purpose of the first four sections is to establish a solid theoretical and evidence-based
foundation to explore components related to appraising and generating IT business value.
The fifth and final part of the literature review will integrate the related domains of IT business
value into a scorecard related to overall competitive advantage. This section will be the
foundation of the survey data collection and analysis component of the research.
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2.1 Theoretical Background
2.1.1 Competitive strategy
Debates and reviews within the topics of IT and firm performance require an understanding of
competitive strategy (Porter, 2008; Johnson et al., 2007; Teubner and Mocker, 2009). From a
business perspective, firms that become more proficient at gaining a competitive advantage -
i.e. earning higher financial, social, and ecological returns in ways that are difficult to copy – are
more likely to establish barriers to competitive erosion (Porter and Millar, 1985). To do this,
Porter and Millar (1985) created the value chain assessment to provide insight into the
activities within a firm, as well as how these activities relate overall value generation. IT has
been shown to strongly influence and advance business activities and in some extreme cases
restructure entire industries (Table 1)
Table 1 IT Value Chain activities and impact.
Primary Activities Support Activities IT Impact
Inbound logistics Firm infrastructure Planning models Automated warehouse
Operations HRM Automated personnel
scheduling
Flexible manufacturing
Outbound logistics Technology development Computer-aided
design
Automated ordering process
Marketing and sales Procurement Online procurement
of parts
Telemarketing / remote
terminals for salespersons
Service Remote servicing of
equipment
Computer scheduling and
routing of repair trucks
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Although the competitive forces perspectives carry strong merit in critiquing how technology
impacts competition, subsequent research questioned the viability of strategic information
systems creating a sustainable competitive advantage based on ease of copying (Doherty and
Terry, 2009, Galliers, 1999; Carr, 2003).
2.1.2 Strategic-necessity hypothesis
Building on this notion, arguments for the commoditisation of IT and general availability for
copying IT solutions has led to the belief from some researchers that “IT Doesn’t Matter” (Carr,
2003). However, contrary to this point-of-view, empirical studies found that “benefits resulting
from an innovative application of information technology can be more readily defended if the
system exploits unique resources of the firm” (Clemens et al., 1993). This perspective of
‘strategic-necessity’ was further supported by Powell and Dent-Micallef (1997) who found that,
“IT resources alone do not provide competitive advantages; rather, firms can gain competitive
advantage by leveraging complementarity between business and human resources.” In short,
the argument for investing in and strategically utilising IT as an enabler of business
improvement and competitive need presents a strong theoretical foundation for further
exploration.
2.1.3 Resource-based view
Other views suggest that IT provides the platform for awakening new business processes and
business model innovation through the strategic deployment of firm resources (Feeny and
Willcocks, 1998; Huang et al., 2009; Tarafdar and Gordon, 2007; Prahalad and Hamel, 1990). It
is the joint-forces of both technology and business processes that provide the essential
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nutrients for firms to translate into cost leadership, differentiation, and a combination of both
to gain and sustain a competitive edge (Kim and Mauborgne, 2005).
Along this line of creating a sustained competitive advantage, one theory for preventing
competitive erosion is founded on the need “to find sources of [differentiation] that continue
to exist after efforts to duplicate that advantage have ceased” (Barney, 1991). The resource-
based view of the firm provides a framework aligned with establishing hard-to-copy, rare, and
non-substitutable resources and capabilities above and beyond the conventional tactics of
aligning products and market-need (Ibid.). In addition, from an IT perspective, the resource-
based view advocates how the enterprise resources apply the technology, rather than the
technology artefact itself (Bharadwaj, 2000; Doherty and Terry, 2009; Dent-Micallef, 1997).
2.1.4 Summary of relevant areas of focus for each strategic framework:
•Industry structure
•Competition
•Value-chain activities
Competitive Strategy Relevant Areas
•Need for maintaining competitive place
•Avoid lagging behind
•Align with industry shifts , i.e. Kodak and Apple
Strategic Necessity Relevant Areas
•Human resources
•Core competences and capabilities
•Difficult to copy
Resource-based view Relevant Areas
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In sum, the theoretical background for how IT relates to overall business strategy can be
associated with multiple strategic approaches: competitive, strategic-necessity, and the
resource-based view. This is important from an academic standpoint as it offers potential for
integrating these components into a single model for future evaluation and validation. From a
practical point-of-view, recognition of how IT directly and indirectly serves a firm’s strategic
agenda is crucial as it relates to aligning structure, objectives, need, and human capital
development (Teubner and Mocker, 2009).
Linking the strategic elements into an implementation approach and value-generation requires
an understanding of the fundamental building blocks of strategic execution: purpose, long-
range goals, culture, structure, strategy, metrics, portfolio management, and operations
(Morgan et al., 2007; Bossidy and Charan, 2006). Strictly related to IT business value, it is logical
to suggest factors also exist within IT strategic execution: alignment with business strategy and
operational model, the IT business case, IT strategic project management, and underpinning
capabilities required to create value from IT investments (Feeny and Willcocks, 1998; Tallon,
2008; Tallon and Kraemer, 2007; Tallon, 2008; Gliedman, 2008, Tarafdar and Gordon; 2007;
McAfee and Brynjolfsson, 2008; Ross and Beath, 2002).
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The next section of this paper will review the various aspects involved with aligning, generating,
measuring, protecting, and sustaining IT business value. The areas include the:
1. Metrics and process used to appraise the IT business case
2. Metrics used to assess IT business value generation
3. Role IT strategic execution plays in improving IT business value
4. Capabilities in which influence and/or improve IT business value
5. Assessment of current business model theory and its influence to IT business value
2.2 IT Business Value: Appraisal process, metrics, and realisation
2.2.1 The IT business case process and metrics to appraise IT investment
opportunities
The criteria and process for evaluating significant IT investments options are extensive (Ross
and Beath, 2002; Gunasekaran et al., 2001; Nelson, 2009; McAfee and Brynjolfsson, 2008; Buss,
1983; Dawson and Wang, 2009; Gliedman, 2008). Recent findings emphasise the critical
dependencies between IT and business operations. These studies strongly recommend
management teams adopt an integrated IT investment model that concentrates on the total
economic impact: strategic, tactical, operational, risk, as well as tangible and intangible factors
(Gunasekaran et al., 2001; Gliedman, 2008; Davenport, 1998). This includes the use of a
comprehensive approach for selecting and measuring benefits and costs associated with IT
solutions. In addition to these traditional metrics, Ross and Beath (2002) suggest a framework
for IT investment which distinguishes four fundamental types of investments: 1) Process
Improvement, 2) Experiments, 3) Renewal, and 4) Transformation (2002). This aspect of
B. Duthie Page 27
properly characterising the investment is suggested to have long-run, business value benefits
(Ross and Beath, 2002; Shenhar and Dvir, 2007). Despite the value inherent in these
frameworks, it is unclear whether the underpinning metrics and criteria for assessing and
realising IT business value were consistent across the different types of investments.
Despite these well-documented blue prints for management to follow, the criteria and process
for appraising and deciding which IT initiatives to implement is a highly debated topic and can
be subject to biases due to the lack of a formal decision-making process (McNamee and Celona,
2005; Buss, 1983; McAfee and Brynjolfsson, 2008). This challenge could be based, in part, on
the lack of connecting the evaluation process with the desired outcome metrics into a joint set
of activities (CFO Publishing Group and Deloitte, 2007; Ashurst and Doherty, 2003; Gottschalk,
1999).
2.2.2 The IT business value realisation metrics
To better understand the linkage between IT business value appraisal and IT business value
generation, metrics were collected to understand how firms track and measure value derived
from IT investments. This is a critical component to understand as it relates to the intersection
between strategy, execution, and operations.
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2.2.3 Summary of IT business value-appraisal and value-generation metrics
To simplify and break down the processes and metrics involved with developing an IT business
case as well as measuring IT business value realisation, the metrics are aggregated using a
balanced scorecard framework (Table 2) (Martinsons et al., 1999; Kaplan and Norton, 1992) the
outcome provides fundamental questions to explore if the components are actually being used
in practice.
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Table 2 Balanced scorecard approach for cataloguing IT business value-appraisal and value-generation metrics1.
Balanced Scorecard Metric Business Case: Value-appraisal Business Outcome: Value-generation Financial Perspective Positive Net Present Value Increase revenue
Accepted Return on Investment Decrease software development costs
Competitive advantage potential Decrease service delivery costs
Product cost Decrease product costs
Budgets Delivers an acceptable NPV / ROI
Current profit level
Current revenue External Perspective Improve customer relationship Increase speed
Service to society Increase flexibility
Securing future business Increase market appeal
Decrease time to market
Decrease product failure Internal Process Perspective Focus on strategic fit Reduces corporate risk
Complies with government regulations Reuses existing capital
Quality improvement Increases capacity
Risk of not investing in IT Decrease time to benefit
Priority of investment Enables strategic improvements
Alternate technology
Labour / effort required
Inventory
Implementation time
Defect rate of existing products
Learning and Innovation Perspective Competitive advantage potential Allows workers to change behaviour
Teamwork Sufficient resources for IT research
Job enrichment Sufficient resources for IT staff development
Builds partnership with users Enables business model innovation
1Tangible and intangible metrics are sourced from Gunasekaran et al., 2001 and Gliedman, 2008. The author arranged these metrics using a balanced scorecard framework based on Kaplan and Norton, 2001.
B. Duthie Page 30
2.3 IT Strategic Execution
Realism is the heart of execution, but many organisations are full of people who are trying to
avoid or shake reality - Bossidy and Charan, Execution.
Building of the components of business case and value-generation metrics IT strategic
execution plays a distinct and formidable role in generating IT business value (Rettig, 2007;
Atkinson, 2006). This is important to assess based on the continual perception and reality of
failed IT projects (Schrage, 1997; Matta and Ashkenas, 2003); failed IT projects can have serious
repercussions for the performance and viability of firms (Atkinson, 1999). For example, in 1999,
eBay’s system upgrade grinded the website to a crawl for three days costing the company $2
million per day and 10% decrease in stock price (Bharadwaj et al., 2009). Furthermore, in 2001,
Nike ran into problems with the implementation of its new supply-chain system causing them
to fall short of Q3 projections. The result was a 20% drop in stock price (Ibid.).
Although these are single examples, further evidence supports a trend that failure in
strategically important systems generally yields more severe consequences than failures
involving systems not critical to production or customer service (Mähring and Keil, 2008). For
the purpose of this study, it is relevant to point out that evidence suggests the failures are not
exclusively technology failures per se, but rather deficient technical and managerial capabilities
(Brynjolfsson and Hitt, 1998).
Notwithstanding the abundance of reported failed IT projects, there is strong evidence
supporting IT project success stories as well. For example, the Harvard Business Publishing case
B. Duthie Page 31
study on the Singapore National Library Board business systems transformation project showed
staggering results as it related to its organisational growth, technology capabilities, and human
resource development (Hallowell and Applegate, 2004). As it related to technology, this
particular project team used technology to serve the strategy, not drive it (Morgan et al., 2007).
Other examples in relation to firms investing in IT focus on improving the firms’ analytical
capabilities. Specifically, the research firm International Data Corporation (Davenport and
Harris, 2007) reported the following findings related to investing in analytical-type IT business
value projects:
aimed at improving production had a median ROI of 277 percent
involving financial management had a median ROI of 139 percent; and
focused on predictive technologies had a median ROI of 145 percent.
A final example of an IT project success story relates to the application of a disciplined project
framing methodology. One demonstration of the impact of proper framing is found when a
major US telecommunications provider underwent a substantial shift in its technical
architecture to improve its online monitoring and support capabilities (Shenhar and Dvir, 2007).
Through using a well-structured approach to project framing, management organised the team
structure and overall governance to successfully mitigate major project risks and help achieve
overall business benefits (Shenhar and Dvir, 2007; Bossidy and Charan, 2006).
The process of proper framing provides management with an accurate understanding of the
degree of risk and change as it relates pace, technology, complexity and novelty to the
business. This understanding is required to make decisions about how specific projects should
B. Duthie Page 32
be managed to achieve strategic objectives (Shenhar and Dvir, 2007; Atkinson, 2006). This so-
called NTPC (novelty, technology, pace, and complexity) framework provides a well-structured
and proven way to do this (Shenhar and Dvir, 2007) (Figure 2).
Figure 2. The NTPC model to Project Management.
In summary, as it relates to the underpinning explanations for these success stories, execution
appears to play a large role. Specifically, the key components related to project success
included are summarised in Table 3:
B. Duthie Page 33
Table 3. The components of execution that appear to play a significant role in the outcome of IT projects and subsequent business value
Component Management Activities Reference Model Reference Source
Project framing Consider novelty to business Consider technology change Consider required pace
Consider complexity
NTPC Shenhar & Dvir,
2007
Project synthesis and transition
PM process is scalable and aligned to project size PM process follows business strategy priorities Project receive required resources and sponsors Projects measure benefit realisation Changes to existing operational processes are considered Project implementation status is actively monitored Project completion is made clear Management support smooth project delivery
Strategic-Execution-
Framework
Morgan, Levitt,
Malek, 2007
B. Duthie Page 34
2.4 IT Capabilities to contribute and sustain business value
In conjunction with the business case, value metrics, and strategic execution frameworks,
businesses must also consider the required capabilities to realise the objectives and ambition in
the first place. For IT, the strategic capabilities are defined as those that help a firm achieve a
competitive advantage in ways that are hard to copy. Well documented by Davenport and
Harris (2007) in their book, Competing on Analytics: The New Science of Winning, these
capabilities originate with firms having the internal know-how and systems to generate
powerful business intelligence, scenario analysis, and predictive modelling. Simply put, it
represents a co-evolution of IT and business capabilities to address the fundamental business
challenges required to maintain market relevance. Three dimensions of capabilities can be used
to support this perspective: 1) strategic, 2) tactical, 3) maturity.
The first dimension is strategic and grounded in the notion for generating critical business
intelligence. To be sure, this is not a new concept, nor is it about becoming a better forecaster.
In his seminal article “Scenarios: Unchartered Waters Ahead,” Pierre Wack (1985) illustrated
how Royal Dutch Shell essentially turned uncertainty to profitability using a systematic
approach of combining known and unknown information to generate plausible business
scenarios. This concept was further expanded by Paul Schoemaker (1995) from the Wharton
School illustrating the use of technology in the process for constructing futures. Decreasing
costs and increasing accessibility to supporting technology is making this strategic capability
more accessible to more firms; however, firms still require the knowledge workers and the right
B. Duthie Page 35
talent to ask the right questions and effectively mine the information to generate the desired
value (Boudreau and Ramstad, 2007; Hamel, 2007).
The second dimension is geared to tactical effectiveness. Wade and Hulland (2004) distinguish
between “outside-in,” “spanning,” and “inside-out” capabilities are summarised as follows:
2.4.1 Outside-in capabilities
External management – sustaining relations outside the firm
Market responsiveness – ability to collect information outside the organisation and
effectively share and distribute this with internal stakeholders
2.4.2 Spanning capabilities
IT / business partnerships – establish strong business alignment within and across firm
divisions
IT management and planning – operational management of the overall IT division as it
relates to people and technical resources
2.4.3 Inside-out capabilities
Infrastructure – underpinning technology to support business model (i.e. centralised
and/or decentralised computing environment)
IT technical skills – internal skills to utilise existing technology assets to their full
potential
IT development – concentrates on developing and/or deploying the right applications in
effective ways
B. Duthie Page 36
Cost effective IT operations – focused on running IT using processes that support overall
operational efficiency.
2.4.4 Capability Maturity Model
The final dimension is related to the level of IT maturity within the firm. Based on the Capability
Maturity Model (CMM) for Software developed by Carnegie Mellon, firms will typically operate
at one of the following levels:
Figure 3 Software Capability Maturity Model.
The underpinning purpose of the model is to integrate the software engineering process into
the scope and culture of management excellence (Paulk et al., 1993; Jiang et al., 2003). From
this, it has been reported the level of CMM maturity (i.e. degree of integration with
management involvement), can have positive impacts on IT project value. However, not every
B. Duthie Page 37
level generated the same degree of demonstrable benefits (Jiang et al., 2003). This
inconsistency creates an opportunity for further exploration.
In sum, strategic, tactical, and maturity capability-dimensions related to generating and
sustaining IT business value can be categorised as follows:
Table 4. Summary of IT capabilities: Strategic, tactical, and maturity related to IT business value.
Level Capability Source
Strategic
Builds partnerships with users
Davenport & Harris, 2007
Predictive modelling identifies profitable customers
Real-time price adjustments to achieve highest possible yield
Effectively measures advertising and marketing impact
Data is considered a strategic resource
Tactical
PM process follows business strategy priorities Davenport and Harris, 2007; Wade and Hulland 2004; Morgan et al., 2007
IT adheres to agreed upon SLAs
Integrates internal and external data
Efficient production problem resolution
Allows workers to change behaviours
Sufficient resources for IT research
Sufficient resources for IT staff development
IT managers focus on business process improvement
Knowledge workers analyse data; not collect it
IT Maturity
Continuously improving CMM, Carnegie Mellon, 1993
Predictable process
Standard, consistent process
Disciplined process
B. Duthie Page 38
2.5 Relationship between IT and the Business Model
The strategic role of information technology is largely related to the firm’s positioning vis-à-vis
its products, customers, channels, as well as its underpinning business and operating models
(Johnson et al., 2007). To be sure, a business model describes the structure of products,
services, information flows, and the role of human capital; whereas the operating model
describes how the organisation aligns its technology and activities to the economic structure of
the industry (Johnson et al., 2007; Moore, 2005).
Consequently, the role IT plays within a firm’s business model can have profound effects on
sources of revenue, information processing capabilities, as well as overall cost savings
(Mahmood and Mann, 2000; Kauffman and Weill, 1989; Rockart, 1979; Orlikowski and Robey,
1991; Tallon and Kraemer, 2007; Ferguson et al., 2005; Moore, 2005). To advance the
understanding of this linkage, Moore (2005) created the concept of two fundamentally
different types of business operating models; each type would utilise a specific type of
technology architecture to support the business model. The first, a “Volume Operations”
business model requires a technology-centric platform which drives the high-volume delivery of
standardised product offerings. Such examples include Nestlé, Proctor & Gamble, and Nike
(Moore, 2005). The key defining traits associated with the Volume Operations business model
include:
1. Utilise customer-centric systems
2. Target growth to millions of customers
3. Produce standardised products
B. Duthie Page 39
The alternate foundational business model is the “Complex-Systems” model based on highly-
specialised solutions relying on a series of technologies that are effectively glued together
within an integrated solution architecture framework. Examples of firms that adopt this
structure include IBM, SAP, IDEO, and Honeywell. The defining traits for this business model
include:
1. Utilise multiple, business line application solutions
2. Target growth to thousands of customers
3. Produce specialised, non-standard solutions
B. Duthie Page 40
The Complex-Systems and Volume-Operations Model are represented in the following Figures 4
and 5 (from Moore, 2005):
Target Customers
Solution Sales
Consulting & Integration Services
Solution Architecture
3rd party element
Element #1
Element #2
Element#3
Technology Architecture
Legacy System Legacy System Legacy System Legacy System
3rd party element
Integration Platform
Figure 4. The Volume-Operations Model
Figure 5. The Complex-Systems Model.
B. Duthie Page 41
2.6 Synthesis of theory, the IT business case, business models, business value,
IT execution, and capabilities
The union of the theory and practical evidence related to the generation and fulfilment of IT
business value can be synthesised into the following domains:
Based on these domains, exploration into how these components contribute to IT business
value is the concentration of the quantitative section of the research.
•Financial and non-financial metrics
•Framework: Balanced scorecard
•Source: Kaplan and Norton; Soh and Markus, Porter and Millar
DOMAIN 1: IT Business Value-Appraisal and Value-Realisation Metrics
•Strategic alignment and delivery of IT initiatives to serve overal business objectives
•Framework: Strategic Execution Framework and Diamond Approach to Project Management
•Source: Morgan et al; Shenhar and Dvir
DOMAIN 2: Strategic IT Execution
•Stratetic, tactic, and software maturity level
•Framework: Competing on Analytics; Software Capability Maturity Model.
•Source: Davenport and Harris; Carnegie Mellon; Wade and Hulland 2004
DOMIAN 3: IT Capabilities
•Volume vs. Complex business models
•Framework: Business Model Architectures
•Source: Geoffrey Moore; 2007 DOMAIN 4: Operating Business Model
B. Duthie Page 42
3.0 Methodology
3.1 Research Strategy
Exploratory studies are a valuable means of finding out ‘what is happening; to seek new
insights; to ask questions and to assess phenomena in a new light’ (Saunders et al., 2007). A
mixed-method strategy was employed to assess the research questions and overall research
objectives. The specific strategies included an in-depth literature review and a comprehensive
survey based on the domains highlighted. This mixed-method approach is widely adopted in the
information technology, strategy, and organisational management reviews and proves to be the
most suitable approach to address the current research questions (Tallon and Kraemer, 2007;
Piccoli and Ives, 2009, Lederer and Sethi, 2009; Kauffman and Weill, 1989).
B. Duthie Page 43
Figure 6. High-level research taxonomy.
3.2 Research Objective and Research Strategy and Alignment with Literature
Review
An extensive literature review explored themes and commonality to the stated research
questions. To do this, an electronic search was performed spanning the information systems,
strategic management, IT business value, and strategic execution literature. This approach
revealed that the literature on IT business value stretches across theoretical, practical, and case
study examples. Through electronic search engines, the author conducted key word searches
on the following terms, “IT business value,” “IT strategic execution,” “IT business case,” and “IT
Primary Research Question:
What is IT business value and how is it
created?
Mixed-Mode
Research
Strategy
Questionnaire
Domain 1:
The IT Business Case Elements and
Metrics
Financial
Non-financial
Domain 2:
Business Model Alignment
Volume-Operations
Complex-Systems
Domain 3:
Strategic IT Execution
Framing & Planning
Governance &
Monitoring
Domain 4:
IT Capabilities
Maturity Level
Strategic
Tactical
Literature Review
Theoretical
Framework
Business Value
Definition
B. Duthie Page 44
strategic planning.” The results provided qualitative evidence and relevant insight into the over-
arching research questions which helped formulate the basis of the questionnaire.
3.3 Survey questionnaire
3.3.1 Sample population
A self-selecting sampling technique was most appropriate due to the exploratory nature of the
study. The author selected a target group of 81 professional colleagues ranging from chief
executives to project managers who have been involved in large-scale strategic IT execution
initiatives. Using a web-based survey tool2, invitations to participate were distributed directly to
the target audiences email accounts. The participants were able to complete the survey online
in approximately 20 – 25 minutes. The survey was open for a total of 14 days. Data was
collected from those who responded. In addition, a hyperlink to the survey was posted on three
professional social media discussion boards: Vancouver IT professionals, Stanford Advanced
Project Management Alumni, and Durham Business School Alumni.
2 Constant Contact online survey tool was used to generate and distribute the research questionnaire. Opening letter and survey can be found in the Appendix.
B. Duthie Page 45
3.3.2 Survey Design
The survey strategy is a widely employed technique used in business and management
research. It supports the exploratory nature of the current research project in an economically-
viable way. The particular research instrument used for the current study was self-administered
using the Internet. The survey included six themes and 54 questions.
To construct the survey, the research questions and objectives were group into the following
themes: 1) General firm characteristics, 2) IT Business Case, 3) IT Business Value, 4) IT
Execution, 5) IT Capabilities, and 6) Operating Business Model
This approach allowed detailed questions to be asked within a specific domain of IT business
value realisation. Using a four-point Likert Scale, the questions were specifically derived from a
diverse set of previous studies and theories involved in assessing the IT business case, IT
business value, strategic execution, IT maturity, organizational business model, and competitive
advantage.
It should be noted that general firm characteristics were primarily captured to ensure that the
respondents were answering the questions with a single firm in mind (this was also part of the
survey instructions) (Appendix).
B. Duthie Page 46
Table 5. Linkage between research questionnaire and research questions and objectives.
IT Business Value Domain
Description Source questions Relevance to Research Questions (RQ) and Research Objectives (RO)
Research Question
No. of Questions
General Firm Characteristics
Industry, number of employees, annual revenue, role
Author Helps evaluate responses in relation to overall industry and firm size to see if these factors may relate to IT value-generating activities
N/A 4
IT business case Fundamental components used in justifying large-scale IT investments, considers overall strategic intent
Morgan, Levitt, Malek Forrester; Gunasekaran et al. (2001); Deloitte (Look closer, Look Further); Lederer and Sethi, 2009
The IT business case helps determine focus for creating IT business value and determining strategic projects
RQ1 7
IT business value Fundamental components for assessing and measuring how IT contributes to business value
Forrester, Brynjolfsson and Hitt; Porter and Millar; Galliers; Piccoli and Ives; Weill
What is IT business value and how is it measured? What are the components of IT that have the greatest degree of influence for achieving IT business value?
RQ2 16
IT execution Review best practices for planning and executing IT initiatives in relation to overall project management approach
Morgan, Levitt, Malek, Forrester; Shenhar and Dvir
IT strategic execution requires cross-functional activities that play a role in measuring IT business value; Firms that execute the right projects in the right way are more likely to achieve superior IT business value; What role does IT strategic execution play in improving overall firm performance?
RQ3 13
IT capabilities Considers IT maturity as well as behaviours that are relevant for generating a competitive advantage
Carnegie Mellon Capability Maturity Model; Davenport and Harris; McAfee and Brynjolfsson
How do firms achieve IT business value to remain competitive?
RQ4 8
Business Model High-volume vs. low volume transactional business; customer-centric vs. technology centric; millions of customers vs. thousands of customers
Geoffrey Moore,2007 Business model is related to the role of how IT contributes to business value
RQ5 7
B. Duthie Page 47
3.3.3 Data analysis
The exploratory approach lends itself to investigate central tendency as well as dispersion of
responses (Saunders et al., 2007). In addition, due to the nature of the research objectives,
relationships between IT business value-generation related to specific domains were also
explored. However, the sampling technique employed (i.e. self-selection) limited statistical
usage. As such, no statistical significance in the data was explored. Results are analysed to
identify potential trends that may be indicative of real statistical relationships and as such offer
fertile grounds for future research.
3.4 Methodological strengths and limitations of the research design
3.4.1 Strengths
The strengths of the proposed research design can be divided into two areas: 1) research design
quality, and 2) research logistics.
Research Design Quality
The self-selected, survey technique using closed questions, combined with a detailed literature
review provides the capability to analyse IT business value at a relatively deep level. In addition,
the approach provides the opportunity to contribute further observations to existing theory
with the ambition to provide evidence for possible trends that may exist in practice.
B. Duthie Page 48
Research Logistics
From a logistical perspective, the benefits of the internet-mediated questionnaire technique
include:
High confidence the right person has responded
Low likelihood of distortion of respondent’s answer
Reasonable response rate of 11% when used external to a single organisation
Data input is automated
Relatively low-cost tactic for completing data collection
Time frame between 2-6 weeks to complete data collection.
3.4.2 Weaknesses
The limitations are based on the restricted empirical and statistical analyses not supported by
the self-selected population research design (Saunders et al., 2007). In addition, due to time
and resource constraints the current study did not:
Execute a “test re-test” activity to validate the reliability of the questions.
Validate internal consistency through correlating responses between related questions
Use alternative forms of the same question to validate consistency in respondents’
answers
B. Duthie Page 49
4.0 Results and Discussion
4.1 Survey response rate
Out of the 81 surveys distributed, 37 came back fully completed. This response rate of 47% is
deemed an acceptable level for a self-selected sample population analysis (Saunders et al.,
2007).
4.1.1 Firm Characteristics
Responses were categorised based on industry type, firm size, and role of the responder. The
primary purpose of these questions was to identify if the sample population was skewed to any
particular industry and/or size. However, it was beyond the scope and objectives of the
research to perform a detailed comparison between responses collected based on any of the
firm characteristics. If particular responses provided evidence that a potential trend might exist,
these were highlighted and posed for future consideration.
Firm Size and Industry
In relation to firm size, 15 out of 37 firms employed less than 1000 employees. The remaining
22 firms employed > 1000 employees and had annual revenue greater than $100M. In three
cases, a firm had more than 1000 employees but less than $100M in revenue. Twelve out of 37
responses were from the banking industry. The remaining two-thirds were comprised of
representation from manufacturing, consulting, computer, education, government, health care,
and video gaming. This was important in order to understand if responses might be skewed
based on industry type – a previously relevant component of IT value (Porter and Millar, 1985).
B. Duthie Page 50
Respondent’s Role
Over 57% (21 out of 37) respondents represented an operational management role within their
firms. Chief Executive and consultant roles represented 16% each. Project management and
business analyst roles collectively made up the final 11%.
4.2 Research Question 1: What are the processes and metrics used to appraise
IT business value investments?
4.2.1 The IT business value-appraisal processes
For all questions associated with best practices related to the IT business case, all responders
indicated preferences within the following areas:
Table 6. Prioritisation of IT business cases adopted by sample population
Process for prioritising IT business cases % of Responders who "Agreed" or "Strongly Agreed"
Focus on strategic fit when making investment decisions
76%
Strategic prioritisation 73%
Avoid becoming all things to all people 70%
Disciplined and implemented appraisal process 68%
We translate strategic language into investment criteria
65%
Use leading internal and external indicators 62%
Pinpoint investments 49%
Adopt scenario planning to assess multiple futures 43%
Based on these responses, firms appear to be adopting a process for strategically evaluating
and prioritising IT investments as they related to overall firm objectives. This is a critical stage in
the process of achieving IT business value based on realistic economic constraints. These results
B. Duthie Page 51
are consistent with the rising popularity of consulting firms providing services assisting senior
management with evaluation and recommend actions for strategic IT investments. Of interest
in the findings, scenario planning (as well as pinpointing investments) still appears to be lagging
behind the more traditional tactics for assessing investment projects.
4.2.2 The IT business value-appraisal metrics
In relation to IT business-case decision criteria, the top seven components responders chose
included: improving customer relationship capabilities, competitive advantage potential,
improving overall quality, budgets, securing future business, implementation time, and labour /
effort required. These responses are tightly aligned with the three tiers of strategic planning:
competitive, strategic-necessity, and resource-based view.
Figure 7. Metrics to establish the IT business case.
0
5
10
15
20
25
30Competitive advantage potential
Service to Society
Job Enrichment
Quality Improvement
Improve Customer Relationship
Securing Future Business
Risk of Not Investing in IT
Teamwork
Budgets
Priority of InvestmentNet Present Value
Product Cost
Current Profit Level
Current Revenue
Alternate technology
Labour / Effort required
Inventory
Implementation Time
Defective rate of existing products
Components and metrics involved in evaluating IT investment options
B. Duthie Page 52
Perhaps a bit surprisingly, only 22% of respondents ranked net present value as an adopted
metric in deciding IT investments. Conventional financial appraisal techniques suggest net
present value is one of the most important deciding factors in approving and rejecting
investment opportunities (Christensen et al., 2008). However, recent evidence and theory
suggests the limitations of this technique related to the factors considered, underpinning
assumptions, and relation to innovation as a broader measure of the real value potential
associated with the investment (Ibid.). This recent evidence is in stronger support of the current
data indicating firms may also associate IT with business model innovation. A larger sample size
and broader representation of different industries could indeed support this suggestion.
This is relevant to both theory and practice as a worthwhile endeavour due to the continual
need to justify IT investments as it relates to competitive positioning in both economic boom
and bust cycles (Pricewaterhouse Coopers, 2009; Hammer and Champy, 2003). In fact, recent
studies within the financial services industry suggests banks should take the time during the
financial crisis to renew technology with the intention of adopting a more current and
innovative operating model for the future, despite potentially low project NPV’s (Dawson and
Wang, 2009; Pricewaterhouse Coopers, 2009). Laggards, as it suggests, could peril in the
absence of modern IT to support these re-engineering initiatives (Ibid.).
Also interesting to highlight is the apparent lack of focus on job enrichment, teamwork, and
service to society related to IT investment decisions. As these responses could be hindered by
the limited sample population, future analysis into a wider, more representative population
B. Duthie Page 53
would be worthwhile to assess the adoption of these considerations. The rationale for adopting
these particular intangible metrics may be related to the need for both attracting and retaining
top talent interested in working for firms managing a triple-bottom line approach to business
success and corporate strategy (Hamel, 2007). As such, further research in this area is
recommended.
Finally, it is worthwhile to mention the survey responses appear to indicate only minimal
benefit from highlighting risks associated with not investing. As this could be perceived as a
threat to decision-makers, IT practitioners may require better tools to accurately portray the
status quo in relation to investing in IT. This approach could potentially help paint a more
realistic comparison between “with and without” options. One potential technique could be the
adoption of the IT capability (discussed later in the paper) linked to investment-specific scenario
analysis. From a theoretical point of view, academics can assist in developing actionable models
for creating IT investment scenarios with a concentration on the tangible and intangible
strategic benefits and risks to the organisation. Some promising results in the current study
suggest some firms may be heading this way already (Figure 8).
Figure 8. Capabilities aligned with scenario planning and predictive indicator analysis.
-20 -10 0 10 20 30
Adopt scenarioplanning to assessmultiple futures
Use leading internaland external indicators Strongly disagree
Disagree
Agree
Strongly Agree
B. Duthie Page 54
4.3 Research Question 2: What are benefits and metrics used to assess IT
business value generation?
In relation to the components involved with generating IT business value, the survey revealed
an average of 30 out of 37 responders “agreed” or “strongly agreed” to the following benefits:
Enables business model innovation
Builds partnership with users
Delivers value based on Net Present Value and/or Return on Investment
Enables strategic improvements
Complies with government regulations
Allows workers to change behaviour
Directly increases revenue
Reuses existing capital
Interestingly and consistent with the responses related to determining IT investment options
(Figure 9), resources for IT research and staff development ranked lowest. Specifically, only 9
and 19 out of 37 responses, respectively, “agreed” or “strongly agreed” to these factors.
Explanations could be due to a sampling bias or possibly indicate firms have yet to understand
how to quantifiably link staff and IT research as it relates to driving business value.
This is an important area of concern based on strong-evidence indicating investment into
human capital is a key factor for sustaining long-term firm viability and competiveness (Feeny
and Willcocks, 1998). However, one potential explanation for these responses could be due to
the rapid evolution of technology, impacting a firms’ ability to determine the skills to develop.
B. Duthie Page 55
Further investigation to help understand the core competences and capabilities requiring
further development rather than specific types of technology training may uncover areas that
can indeed contribute to business value as well as sustain long-term viability (Boudreau and
Ramstad, 2007).
Figure 9. IT business value-realisation metrics.
Further responses revealed IT business value was largely measured based on reduction in
service delivery cost, and software development or operating cost. In addition, survey
responses further revealed IT business value was also largely measured based on increases to
capacity, flexibility, speed, and productivity.
-40 -30 -20 -10 0 10 20 30 40
Reuse existing capital
Reduces overall corporate risk
IT investments directly increase revenue
Allows workers to change behaviours
Complies with government regulations
Sufficient resources for IT research
Sufficient resources for IT staff development
Enables strategic improvements
Delivers value based on NPV and ROI
Builds partnerships with users
Enables business model innovations
Strongly disagree Disagree Agree Strongly Agree
B. Duthie Page 56
Figure 10. Metrics used to assess impact of IT investment to business value.
One possible explanation for why more responses did not indicate measurable improvements
within the other categories (reducing product costs, time to benefit, product failures; increasing
revenue and profit) could be based on sampling limitations. Aside from the sampling
limitations, another potential explanation could be due to the non-IT business improvements
associated with IT initiatives. For example, marketing and business process improvements may
require a component of IT within the scope of their initiatives, however, the actual benefits
derived from these activities may be perceived to be related to the actual results of the scope
of marketing and / or process improvement changes (i.e. new products and/or new business
processes) rather than the underpinning technology. These results indeed support Brynjolfsson
41%
43%
54%
59%
59%
65%
22%
27%
38%
49%
51%
65%
Profit
Revenue
Productivity
Speed
Flexibility
Capacity
Product failures
Time to benefit
Product cost
Time to market
Software dev or operating costs
Service delivery cost
Ou
r IT
str
ateg
ic p
roje
cts
hav
ecr
eat
ed in
crea
ses
in:
Ou
r IT
str
ateg
ic p
roje
cts
hav
ecr
eat
ed d
ecr
eas
es
in:
How is IT business value-generation measured?
B. Duthie Page 57
and Hitt’s (1998) hypothesis that IT can be a contributor to business value, but would certainly
not be the sole factor.
In summary, survey responses indicated 40% of the best-practice metrics and processes for
appraising IT business value investments were adopted, whereas 67% of the metrics for
measuring IT business value generation were used (Table 7). These results show promising
indication firms may be advancing their perspective as it relates to measuring benefits,
however, based solely on the current sample population, further rigour can be applied at the
business case stage. The good news is business case responses suggest an emphasis on
strategic fit, alignment with strategic prioritisation; limiting scope, utilising internal and external
indicators, and adopting a disciplined appraisal process. These responses all suggest
progression toward enabling business strategy (Morgan et al., 2007).
Although sampling errors can be attributed to the inconsistency in responses, additional
rationale for the lack of breadth related to IT investment appraisals could be based on lack of
understanding the importance of intangible metrics associated with IT investments. This opens
the door for both advancement in theory and practice for the following reasons. For instance, if
decision makers recognised the value for assessing a broader range of tangible and intangible
metrics as it relates to the overall decision process, the overall IT business case could include
areas such as opportunities for job enrichment, service to society, and teamwork. These areas
have been suggested to play a large role in the linkage for generating and sustaining IT business
value (Ross and Beath, 2002).
B. Duthie Page 58
Table 7. Summary of value-appraisal and value-generation benefits and metrics3.
Balanced Scorecard Metric Business Case: Value-appraisal Business Outcome: Value-generation Financial Perspective Positive Net Present Value Increase revenue
Accepted Return on Investment Decrease software development costs
Competitive advantage potential Decrease service delivery costs
Product cost Decrease product costs
Budgets Delivers an acceptable NPV / ROI
Current profit level
Current revenue External Perspective Improve customer relationship Increase speed
Service to society Increase flexibility
Securing future business Increase market appeal
Decrease time to market
Decrease product failure Internal Process Perspective Focus on strategic fit Reduces corporate risk
Complies with government regulations Reuses existing capital
Quality improvement Increases capacity
Risk of not investing in IT Decrease time to benefit
Priority of investment Enables strategic improvements
Alternate technology Increases productivity
Labour / effort required
Inventory
Implementation time
Defect rate of existing products
Learning and Innovation
Perspective Competitive advantage potential Allows workers to change behaviour
Teamwork Sufficient resources for IT research
Job enrichment Sufficient resources for IT staff development
Builds partnership with users Enables business model innovation
3 Bolded items indicate the strongest response rate for “agreeing” or “strongly agreeing”
B. Duthie Page 59
4.4 Research Question 3: What role does IT strategic execution play in
delivering business case objectives?
4.4.1 Project Framing:
The results of the survey show strong similarities across all responders agreeing to the
implemented practice for framing projects.
Figure 11. Results for firms applying the NTCP project framing technique.4
4 From Shenhar and Dvir, 2007.
-10 0 10 20 30 40
Consider novelty to business
Consider technology change
Consider required pace
Consider complexity
Strongly disagree
Disagree
Agree
Strongly Agree
B. Duthie Page 60
4.4.2 Project Synthesis and Transition:
Responses were further evaluated to help determine which project execution practices helped
contribute to IT business value. Based on criteria for measuring “project synthesis and
transition” established by Morgan et al. (2007), the survey responders indicated promising
adoption of these best-practice activities (Table 8)
Table 8. Areas of project synthesis and transition adopted by sample population.
Project Execution Synthesis and Transition Activity % of Responders who "Agreed" or "Strongly Agreed"
PM process is scalable and aligned to project size 65%
PM process follows business strategy priorities 68%
Project receive required resources and sponsors 68%
Projects measure benefit realisation 54%
Changes to existing operational processes are considered 73%
Project implementation status is actively monitored 49%
Project completion is made clear 68%
Management support smooth project delivery 76%
Although this is only a subset of the entire model proposed by Morgan et al. (2007),
respondents indicate project management may become a competitive strength. Specifically,
over 60% of responders “agreed” or “strongly agreed” 6 out of 8 activities were considered
implemented practices (Table 8).
Fifty-four percent of responders indicated benefits realisation was actively measured. Related
to this, only 49% of agreed project implementation status was actively monitored. These
findings are consistent with recent evidence suggesting the need for a best-practice framework
linked to benefits realisation (Ashurst and Doherty, 2003). Based on one working definition for
benefits realisation, “the process of organising and managing, such that the potential benefits
B. Duthie Page 61
arising from the use of IT are actually realised” (Ward and Elvin, 2001), the focus is more on the
organization rather than the technology. This could explain why the “agreement” to this
practice as it relates to IT may have been relatively low. It is also possible that projects involving
a large IT component may still have a tendency to be viewed as “technology” projects as
opposed to “business improvement projects” (Henderson and Venkatraman, 1999). This is
another potential explanation for the low adoption rate of benefit management and monitoring
(Ashurst and Doherty, 2003). As it relates to IT business value, the discipline in which IT
projects are managed can have a direct impact on assisting firms achieve a competitive
advantage (Ibid., Shenhar and Dvir, 2007; Venkatraman, 1994; Ewusi-Mensah, 1997; Atkinson,
B, 2006). A deeper assessment with a larger sample population could assist in validating this
potential trend.
Responses revealed promising results in adopting best practices. First, from a framing
perspective the vast majority of responders “agreed” or “strongly agreed” the four critical
dimensions are in place as a mechanism to properly assess scope and risk during project
assessment.
This is encouraging for two reasons. Firstly, project management has evolved into critical
discipline for organisations to successfully execute strategy (Morgan et al., 2007; Shenhar and
Dvir, 2007; Bossidy and Charan, 2006). From an IT business value perspective, value-generation
will occur through execution of strategic IT initiatives. In order to do this, firms will need the
“know-how” to incorporate modern and strategic project management processes (Pfeffer and
Sutton, 1999).
B. Duthie Page 62
Second, the assessment of specific components of project management deemed important
within the sample population suggests these firms may be adopting project management as a
source of competitive advantage (Morgan et al., 2007).
4.5 Research Question 4a: What strategic capabilities play a role in delivering
IT business value?
Results suggest the responders surveyed have yet to fully embrace strategic capabilities related
to driving and sustaining IT business value.
Table 9. IT capabilities. Summary of survey responses demonstrating the adoption of strategic and tactical capabilities.
Type of Capability Capability % of Responders who "Agreed" or "Strongly Agreed"
Average %
Strategic Predictive modelling identifies profitable customers
32
39
Integrates internal and external data 43
Knowledge workers analyse data; not collect it
46
Data is considered a strategic resource 46
Effectively measures advertising and marketing impact
30
61
Tactical IT adheres to agreed upon SLAs 59
Efficient production problem resolution 81
IT managers focus on business process improvement
62
Real-time price adjustments to achieve highest possible yield
43
The survey results indicate that firms may concentrate more on tactical (61%) rather than
strategic capabilities (39%) (Table 9). From a “tactical” perspective, responders indicated the
strongest agreement to its firms’ ability to resolve production issues as well as concentrate on
business process improvement. Although the sample size is not large enough to generalise, the
B. Duthie Page 63
responses may indicate a potential trend could exist with how firms integrate IT capabilities as
part of their operational and strategic agenda.
A potential explanation for these responses may be related to the prevalence of overly complex
and multiple applications within the IT operational environment as suggested in the next
section of the research vis-à-vis systems architectures (see also, Figure 5). This underpinning,
fragmented technical architecture can often generate information management challenges,
thus posing potential barriers from an enterprise-wide, analytical competence standpoint
(Davenport and Harris, 2007). Through further research and a more representative population
from a variety of industries would be worthwhile, as recent evidence suggests strong potential
value for firms to incorporate robust business intelligence into their operational culture (Ibid.).
However, based on the survey responses vis-à-vis operating business model, responding firms
may indeed have multiple IT platforms within their firm (multiple business line applications as
well as customer-centric solutions). This could potentially pose realistic challenges to effectively
analyse data in ways to generate real business value.
B. Duthie Page 64
4.6 Research Question 4b: Does level of IT maturity influence IT business
value?
The final capability studied concentrated on the level of overall IT maturity, based on the
Software Capability Maturity Model (Paulk et al., 1993).
Table 10. IT maturity results within the sample population.
Capability Stage
% of Responders who "Agreed" or "Strongly Agreed"
Continuously improving process 41% Predictable process 14% Standard, consistent process 35% Disciplined process 3%
As it relates to IT maturity, the 41% of responses favoured the highest level of maturity,
“continuously improving process”.
Assessing CMM to IT Business Value Metrics:
When compared against IT business value generation, responses that suggested a high level of
maturity indicated improvements in:
capacity, time to market,
speed,
flexibility, and
overall reduction in service delivery cost.
The limited sample size creates some limitations for developing a correlation between IT
maturity and business value generation; however, based on the survey results, this could
suggest some elements of IT business value may be associated with IT maturity. This is
B. Duthie Page 65
consistent with recent literature. One possible risk in the data is that respondents may not have
fully understood the definitions between the different degrees of IT maturity, thus skewing
responses.
Further studies related to the association between IT maturity and IT business value would be
interesting and relevant for future analysis from a practical and theoretical standpoint for the
following reasons. Firstly, IT practitioners are often challenged to increase the maturity of the IT
practices based on industry best practices. In addition, IT managers are constantly under
pressure to generate more value using fewer resources (De Haes and Van Grembergen, 2003).
If a better understanding of how IT maturity directly impacts overall business value, IT
practitioners would have more evidence to support the advancement of IT maturity. From a
theoretical standpoint, academics could devote more time to test the strength of the IT
maturity models when it relates to value-generation.
B. Duthie Page 66
4.7 Research Question 5: Does the firms’ business model influence how IT
contributes to business value?
Survey responses showed a slight preference toward the Volume-Operations business model
(Figure). An average of 70% of responders “agreed” or “strongly agreed” to the defining traits
of the Volume-Operational Business Model. Interestingly, an average of 61% of the responders
“agreed” or “strongly agreed” to the defining traits of the Complex-System Operational
Business Model traits.
Figure 12. Operating business model survey responses.
This appears to be skewed by the 84% response rate of firms “agreeing” or “strongly agreeing”
to utilising “multiple, business-line applications” (Table 8).
-30 -20 -10 0 10 20 30 40
Customer-centric systems
Grow to millions of customers
Standardised products
Multiple, business line application solutions
Grow to thousands of customers
Specialised, non-standard solutions
Vo
lum
e-O
per
atio
ns
Co
mp
lex-
Syst
ems
Operating business model response distribution from sample population
Strongly disagree Disagree Agree Strongly Agree
B. Duthie Page 67
Table 11. Percentage of firms adopting specific operating business model traits.
Operating Business-Model Type
Defining Characteristics
% of Responders who "Agreed" or "Strongly Agreed"
Average
%
Volume-Operations Customer-centric systems 73% 70% Grow to millions of customers 68% Standardised products 70% Complex-Systems
Multiple, business line application solutions 84%
61% Grow to thousands of customers 41% Specialised, non-standard
solutions 59%
Assessment of Operating Business Model and Business Case and Business Value
Metrics:
No notable differences were observed between IT Business Case and IT Business Value metrics,
between the different operating models (Figures 13 and 14).
Figure 13. Business Model and Business Value Metrics.
0%
25%
50%
75%
100%Competitive advantage…
Service to Society
Job Enrichment
Quality Improvement
Improve Customer…
Securing Future Business
Risk of Not Investing in IT
Teamwork
BudgetsPriority of InvestmentNet Present Value
Product Cost
Current Profit Level
Current Revenue
Alternate technology
Labour / Effort required
Inventory
Implementation Time
Defective rate of existing…
Comparison of IT Business Case metrics used by Volume-Operations and Complex-Systems Operating Models
Volume-Operations Complex-Systems
B. Duthie Page 68
Figure 14. IT Business Value and Business Model comparison.
The results for the operating model suggest three things: 1) responders may not have fully
understood the scope of the survey statement, 2) the business operating model may not have
any influence on the firms’ ability to derive IT business value, or 3) because the theoretical
definition of the two classes of operating models does not offer a ‘hybrid’ option, the responses
may be more representative of actual blended operating business models. Further research
into understanding if and how the operating business model may influence IT business value is
warranted.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%
Revenue
Productivity
Profit
Capacity
Speed
Flexibility
Market appeal
Software development or operating costs
Time to market
Time to benefit
Product cost
Product failures
Service delivery cost
Ou
r IT
str
ateg
ic p
roje
cts
hav
ecr
eat
ed in
crea
ses
in (
sele
ct a
llap
plic
able
)
Ou
r IT
str
ateg
ic p
roje
cts
hav
e c
reat
ed
de
crea
ses
in(s
ele
ct a
ll ap
plic
able
)
Comparison of IT Business Value generated between Complex-Systems and Volume-Operations Business Models (% agreeing and strongly agreeing)
Complex-Systems Volume-Operations
B. Duthie Page 69
4.8 Summary of Results
The section summarises the respondents’ results and then concludes with a comparison of the
results to the best practices determined from the literature review.
Summary of Survey Responses: Research Questions 1 and 2
•Financial Perspective
•Competitive advantage potential, Budgets
•External Perspective
•Improve customer relationship, Securing future business
•Internal Process Perpsective
•Complies with government regulations, Quality improvement, Labour / effort required, Implementation time
•Learning and Innovation Perspective
•Competitive advantage potential
What are the processes and metrics used to appraise IT business value investmnets?
•Financial Perspective
•Increase revenue, decrease software development costs, decrease service delivery costs, delivers an accepted NPV or ROI
•External Perspective
•Increase speed, increase flexibility, reduce corporate risk
•Internal Process Perspective
•Reduce corporate risk, reuses existing capital, increases capacity, enables strategic improvements, increases productivity
•Learning and Innovation Perspective
•Allows workers to change behaviour, builds partnership with users, enables business model innovation
Whar are the metrics used to assess IT business value generation?
B. Duthie Page 70
Summary of Survey Responses for Research Question 3: What role does IT strategic
execution play in improving IT business value?
As it relates to the linkage between project management practices and IT business value
generation, firms that either “strongly agreed” or “agreed” to the adoption of the stated best
practices from project management also reported to have demonstrated business value in the
following areas:
Increase capacity
Increase speed, and
Increase firm flexibility
Due to the limited sample size, it is not possible to correlate these responses; however, the
survey responses may offer fruitful grounds for a deeper assessment between the adoption of
project execution best practices and overall IT business value.
• Considers degree of technological change
• Considers overall project complexity
• Considers required pace to execute
• Considers novelty to the business
Project Framing
• Top management support,
• Project completion is made clear,
• Changes to existing operations
• Required resources and sponsorship, and
• Linkage to strategic priorities
Project synthesis and transition
B. Duthie Page 71
Summary of Survey Responses for Research Question 4: What IT capabilities
influence and/or improve IT business value?
Based on the strategic capabilities for firms to be able to ‘compete on analytics’ outlined by
Davenport and Harris (2007), the survey results reveals firms may require additional attention
within this domain of generating and sustaining IT business value. As these activities are
essential for improving firm efficiency, profitability, and employee engagement, increased
attention for management to develop these resource-based capabilities could lead to
establishing a competitive edge (Ibid.).
The survey results revealed firms with a higher level of IT maturity were deriving business value
from a capacity, speed, flexibility, and service delivery cost dimensions. The limited sample as
well as the potential for misunderstanding the definitions of IT maturity may have skewed the
results. Further assessment into validating if IT maturity and business value are correlated
would be worthwhile to pursue for both academic and practical purposes.
B. Duthie Page 72
• Focus on business process improvement
• Efficient problem resolution
What are the strategic IT capabilities that support the generation and sustainability of IT business value?
• Increases in capacity
• Increases in time to market
• Improved flexibility, and
• Overall reduction in service delivery cost.
How does IT maturity within a firm contribute to IT business value?
B. Duthie Page 73
Research Question 5: Does a firm’s business model influence how IT contributes to
business value?
There was no indication the operating business model influenced the areas in which IT
contributes to business value. Both Volume-Operations and Complex-Systems models
demonstrated equal impact to IT business value in the following ways:
• Service delivery costs
• Product failures
• Product cost
• Time to benefit
• Time to market
• Software development costs
Strategic IT initiatives have created decreases in:
• Market appeal
• Flexibility
• Capacity
• Profit
• Productivity, and
• Revenue
Strategic IT initiatives have created increases in:
B. Duthie Page 74
4.9 Final synthesis of results
Overall, the survey responses indicated the utilisation of components related to achieving IT
business value. In addition, areas of best practice not well-adopted are interesting for further
exploration based on a more representative sample population. The holistic results compare
which areas of best practice were adopted or not within the sample population (Table 12).
Table 12. Summary of survey responses compared to best practice components.
IT Business Value
Domain
Major Components Adopted Components Not Adopted
IT business case
process
• using leading internal and external indicators
• avoid becoming all things to all people
• focus on strategic fit
• adopting a disciplined appraisal process for new
initiatives
• investing based on strategic prioritisation
• Scenario planning
• Systems in place to pinpoint
investments
IT business case
metrics
• competitive advantage potential
• implementation time
• labour / effort required
• budgets, and
• need for securing future business
• NPV
• Risk of not investing
• Current revenue
• Current profit
• Teamwork
• Job enrichment
• Service to society
IT Execution Framing • Considers degree of technological change
• Considers overall project complexity
• Considers required pace to execute
• Considers novelty to the business
All best practices were agreed to be in place
from the survey responses.
IT Execution
Governance
• top management support,
• project completion is made clear,
• changes to existing operations
• required resources and sponsorship, and
• linkage to strategic priorities
• Implementation status actively
measured
• Benefit realised actively measured
IT strategic capabilities • focus on business process improvement
• efficient problem resolution
• considering data a strategic
resource
• knowledge workers concentrating
on data analysis, rather than data
collection
• adjusting prices to achieve the
highest possible yield
• IT adhering to agreed upon service
level agreements
B. Duthie Page 75
5.0 Conclusions and Recommendations
Despite the limited ability to statistically assess the research results, the present study has
generated interesting findings that support the underpinning research objectives. In general,
the findings supported most, yet disagree with a few parts of known theory. The study also
creates new perspectives to the existing body of theory. The following summarises how the key
research objectives were met:
5.1 Alignment between the IT business case and IT value generation metrics
As the results suggest, there is the potential linkage between the utilisation of best practices for
developing the IT business case and the generation of business value. Clearly, the small and
isolated sample size limited the extent to which these findings can be generalised. However
based on the survey responses, it is worth noting a few general observations that are worth
future research consideration.
Firstly, the areas of greatest agreement were associated with IT investments supporting the
strategic agenda for exploiting a competitive advantage potential and need to improve
customer relationships. In addition, the decision for moving forward with particular IT initiatives
was based on the time to implement, as well as budgets, effort required, and opportunity to
secure future business growth. This breadth of metrics is encouraging based on the
conventional and limited tactics of the project’s net present value (Christensen et al., 2008).
The essence of these results is in support of the business case to use tangible and intangible
metrics to assess the potential business value from IT investment prospects.
B. Duthie Page 76
Secondly, additional observations from the survey responses suggest intangible metrics for
approving and measuring IT business value were generally considered less important than
competitive and strategic-necessity perspectives. This is a bit concerning due to the evidence
suggesting IT value requires the right people and processes to play key roles in the realisation of
strategic IT objectives (Marquis, 2006).
Thirdly, there appears to be a substantial gap in the utilisation of customer relationship
improvement metrics between the appraisal stage and the value-generation stage, even when
compared against one of the most recent total-economic impact dashboards (Gliedman, 2008).
Finally, observations from different industries contradict previous studies from Porter and
Millar (1985) which suggested IT business value gains could be limited to specific industries; the
survey results in fact support more recent findings from Kim and Mauborgne (2005),
demonstrating how a broad range of industries can improve through the strategic use of IT.
Collectively, these observations suggest worthwhile management effort could be initiated to
enhance the linkage between external and internal factors and key IT business value metrics.
Based on this trend, a deeper and broader assessment across multiple industries as well as firm
sizes may provide further insights into the components for generating defensible IT business
cases aligned with generating real business value. This broader and deeper analysis should also
survey multiple management levels within a firm: IT and Business Unit management, Chief
Executives, as well as Board of Director members. Through this, academics could begin to
generate strategic frameworks for management practitioners constantly challenged with
B. Duthie Page 77
producing defensible business cases for IT investments and ultimately IT business value
realisation. Aligning this model with decision-maker expectations could assist in improving the
overall investment appraisal process.
One suggestion could lead to dividing the IT business value cycle into integrated phases that
concentrate on: 1) identifying and defining the business need, 2) executing in-depth research
and option analysis, 3) evaluation and selection utilising the rigour of the decision-analysis
discipline, 4) implementation of the initiative, and 5) measuring and managing to achieve
strategic and operational objectives. Each phase could identify key deliverables as well as key
metrics that connect with each other for ease of understanding the flow of activities and
relevant success factors. It is promising that current research is heading in this direction (Rivard
et al., 2009)
5.2 IT strategic project execution’s role in contributing to IT business value
Based on the survey results, there is promising evidence suggesting strategic project
management may also play a critical role in the generation of IT business value. The specific
areas assessed the firm’s adoption of strong project framing techniques as well as
implementing good project governance - two key pieces for successful execution.
Further work to better understand the linkage of IT execution and business value could
concentrate on culture, vision, strategic goals, as well as portfolio and programme management
practices. For example, it would be meaningful to understand how the culture of a firm may
influence the practices used to generate IT business value (Kanungo et al., 2009). Specific firm
B. Duthie Page 78
cultures may influence the management style and type of metrics used to generate the desired
outcome from IT initiatives (Schneider, 1994). Furthermore, it should be highlighted that
project management is a discipline that should be complemented with program and portfolio
management to achieve the alignment required for strategic execution to work (Morgan et al.,
2007). To do this, it is plausible to adopt a generic strategic execution framework and tailor it to
the domain of IT execution.
5.3 Specific capabilities that may influence a firm’s ability to generate IT business
value
The assessment of strategic IT capabilities was intended to help illuminate potential areas in
which firms can generate a competitive advantage from the utilisation of IT and its
underpinning data. Based on the responses, few firms were fully embracing the potential for
‘competing on analytics.’ As stated in the discussion, this could be due to the lack of
understanding of the questions or in fact related to the absence of these types of IT-supported
activities. As this area of so-called business intelligence is becoming more popular, further field
studies may help understand the practices and measurements associated with planning,
implementing, and sustaining both the culture and practices for this potentially profitable
capability.
Furthermore, the incorporation of talent management as a business practice may identify the
pivotal roles in generating IT business value. This could be researched in firms where a strong
talent management function is aligned with attracting and retaining the skills and talent
required for creating business value.
B. Duthie Page 79
In addition, from a more general perspective, overall IT maturity results revealed the potential
linkage to certain aspects of IT business value. These results were reasonably consistent with
previous studies (Jiang et al., 2004). Future studies could concentrate explicitly on the deeper
definition of the IT maturity scale and establish strong linkage to the tangible and intangible
business benefits generated through IT activities. This is a worthwhile pursuit from a theoretical
and practical standpoint to help practitioners potentially understand the impact of improving IT
maturity as it related to business performance.
5.4 How the operating business model of the firm influences IT business value
The assessment of business operating model was intended to help shed light on potential areas
in which firms can align IT business value objectives to the underpinning operational business
model. As the results are incapable of generalising any trends from the responses, this ambition
to pursue all the factors involved with producing and sustaining IT business value warrants a
deeper investigation. To do this, a large sample from multiple industries and multiple sizes
could serve as strong starting ground to understand how IT is implemented and strategically
used. Finally, although previous studies caution management regarding the so-called
“alignment trap” this was more linked to internal as opposed to external alignment (Shpilberg
et al., 2007). Thus, it is plausible to suggest that if IT systems aligned to support the
underpinning business model and the competitive structure of the industry, firms may create a
potential source of competitive advantage that is difficult to copy.
B. Duthie Page 80
5.5 Final comments
Despite the restricted sample population explored, the research was able to generate
interesting perspectives and observations to support evidence that warrant further
investigation. Specifically, the research was able to address the research objectives and provide
observations and explanations in the following areas:
1. Alignment between the IT business case and IT value generation metrics;
2. IT strategic project execution’s role in contributing to IT business value;
3. Specific capabilities that may influence a firm’s ability to generate IT business value;
4. How the operating business model of the firm influences IT business value; and
5. Areas for future exploration in the quest to contribute to the development of IT
business value theory and practice.
Adopting this multi-dimensional assessment into the business value generated from IT also
provides research potential for more specific disciplines within the domain of IT. For example,
with increasing concerns related to both IT security and the rapid advancement of risk
management practices, a similar approach can be taken to ensure these disciplines ultimately
demonstrate tangible and intangible benefits to the organisation. Thus, an integrated approach
that considers the business case, value-metrics, execution, and human capabilities can serve as
a good starting point (Prahalad and Krishnan, 2002).
To conclude this modest research and quest for further integration of theory and practice,
there are promising trends toward educating IT executives and management to maintain
awareness of rising trends and theories for improving organisational performance. This active
B. Duthie Page 81
union between theory and practice sets the agenda for a proactive culture to understand
problems and generate the appropriate invested attention (Learmonth, 2007).
B. Duthie Page 82
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B. Duthie Page 86
EARL, M.J (2009)
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B. Duthie Page 87
GALLIERS, R.D (1999)
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within an Information Systems Strategy Framework. Journal of Strategic Information Systems,
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HAMEL, G; BREEN, B (2007)
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HAMEL, G. (2009)
Moon Shots for Management. Harvard Business Review. Feb2009, p91-99.
HAMMER, M; CHAMPY, J (2003)
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Inc. New York.
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Systems Journal, 32:1, p4-17.
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innovativeness: empirical evidence from the financial services sector. Information Research,
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58.
B. Duthie Page 89
JEFFERY, M; LELIVELD, I (2004)
Best Practices in IT Portfolio Management. MIT Sloan Management Review, 45:3, p41-49.
JIANG, J.J; KLEIN, G; HWANG,H-G; HUANG-J; HUNG, S-Y (2004)
An exploration of the relationship between software development process maturity and project
performance. Information & Management, 41, p279-288.
JOHNSON, G; SCHOLES, K; WHITTINGTON, R
Exploring Corporate Strategy, Chapter 9, Prentice Hall Financial Times, England.
KANUNGO, S; SADAVARTI, S; SRINIVAS, Y (2001)
Relating IT strategy and organisational culture: an empirical study of public sector units in India.
Journal of Strategic Information Systems, 10:1, p29-57.
KAPLAN, R.S; NORTON, D.P (2001)
Transforming the Balanced Scorecard from Performance Measurement to Strategic
Management: Part I. American Accounting Association, 15:1, p87-104.
KAUFFMAN, RJ; WEILL, P (1989)
An Evaluative Framework for Research on the Performance Effects of Information Technology
Investment. Centre for Research on Information Systems, Leonard N. Stern School of Business,
New York University, Working Paper Series.
B. Duthie Page 90
KIM, W.C; MAUBORGNE, R (2005)
Blue Ocean Strategy, Harvard Business School Publishing, USA.
KRELL, K; MATOOK, S (2009)
Competitive advantage from mandatory investments: An empirical study of Australian firms.
Journal of Strategic Information Systems, 18, p31-45.
LEARMONTH, M (2007)
Critical Management Education in Action: Personal Tales of Management Unlearning. Academy
of Management Learning & Education, 6:1, 109-113.
LEDERER, A.L; SETHI, V (2009)
The Information Systems Planning Process – Meeting the Challenges of Information Systems
Planning, Chapter 5, p124-146, in Strategic Information Management: Challenges and
Strategies in Managing Information Systems, 4th Edition, Edited by Robert D. Galliers and
Dorothy E. Leidner.
LUCAS, H.C; GOH, J.M (2009)
Disruptive technology: How Kodak missed the digital photography revolution. Journal of
Strategic Information Systems, 18, p46-55.
B. Duthie Page 91
MAHMOOD, M.A; MANN, G.J (2000)
Impacts of Information Technology Investment on Organizational Performance. Journal of
Management Information Systems, 17:1, p3-10.
MÄRING, M; KEIL, M (2008)
Information Technology Project Escalation: A Process Model. Decision Sciences, 39:2, p239-272.
MARTINSONS, M; DAVISON, R; TSE, D (1999)
The balanced scorecard: a foundation for the strategic management of information systems.
Decision Support Systems, 25, p71-88.
MARQUIS, H.A (2006)
Finishing Off IT. MIT Sloan Management Review, 47:4, p12-15.
MATTA, N.F; ASHKENAS, R.N (2003)
Why Good Projects Fail Anyway. Harvard Business Review, Sept, p1-8.
MCAFEE, A; BRYNJOLFSSON, E (2008)
Investing in the IT That Makes a Competitive Difference. Harvard Business Review, July-August,
p99-107
B. Duthie Page 92
MCAFEE, A (2004)
Do You Have Too Much IT? MIT Sloan Management Review, 45:3, p18-22.
MCNAMEE, P; CELONA, J (2005)
Decision Analysis for the Professional, 4th Edition. SmartOrg Publishers, U.S.A
MELVILLE, N; KRAEMER, K.L; GURBAXANI, V (2004)
Information Technology and Organisational Performance: An Integrative Model of IT Business
Value. Centre for Research on Information Technology and Organisations, University of
California.
MINTZBERG, H (1981)
Organization design: fashion or fit? Harvard Business Review, Jan-Feb, p103-115
MOORE, G.A (2005)
Dealing with Darwin, Penguin Group, USA.
MOORE, G.A (2002)
Living on the Fault Line: Managing for Shareholder Value in Any Economy, HarperBusiness, New
York.
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MORGAN, M; LEVITT, R.E; MALEK, W (2007)
Executing Your Strategy: How to Break It Down and Get It Done. Harvard Business School Press.
U.S.A
NELSON, R.R (2009)
Project Evaluation – Project retrospectives: Evaluating Project Success, Failure, and Everything
in Between, Chapter 14, p326-366, in Strategic Information Management: Challenges and
Strategies in Managing Information Systems, 4th Edition, Edited by Robert D. Galliers and
Dorothy E. Leidner.
ORLIKOWSKI, W.J; ROBEY, D (1991)
Information Technology and the Structuring of Organisations. Information Systems Research,
2:2, p143-169.
PAULK, M.C; CURTIS, B; CHRISSIS, M.B; WEBER, C.V (1993)
The Capability Maturity Model for Software. Carnegie Mellon University.
PFEFFER, J; SUTTON, R (2000)
The Knowing-Doing Gap: How Smart Companies Turn Knowledge into Action. Harvard Business
School Press.
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PICOLLI, G; IVES, B (2009)
Sustaining Competitive Advantage - IT-dependent strategic initiatives and sustaining
competitive advantage: A review and synthesis of the literature, Chapter 2, p34-68, in Strategic
Information Management: Challenges and Strategies in Managing Information Systems, 4th
Edition, Edited by Robert D. Galliers and Dorothy E. Leidner.
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The Five Competitive Forces that Shape Strategy. Harvard Business Review, Jan., p79-93.
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How Information Gives You Competitive Advantage. Harvard Business Review. Jul-Aug, p149-
174.
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Information Technology as Competitive Advantage: The Role of Human, Business, and
Technology Resources. Strategic Management Journal, 18:5, p375-405.
PRAHALAD, C.K; KRISHNAN, M.S (2002)
The Dynamic Synchronisation of Strategy and Information Technology. MIT Sloan Management
Review, 43:4, p24-33.
PRAHALAD, C.K.; HAMEL, G (1990)
The Core Competence of the Corporation. Harvard Business Review, May/June.
B. Duthie Page 95
PRICEWATERHOUSE COOPERS (2009)
Banking On Change: Technology and Operations Excellence in a post-financial crisis world.
Financial Services Research Institute. September.
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The Rise of Globally Adaptive Organizations. Forrester, 2006.
RAVICHANDRAN, T; LERTWONGSATIEN, C (2005)
Effect of Information Systems Resources and Capabilities on Firm Performance: A Resource-
Based Perspective. Journal of Management Information Systems, 21:4, p237-276.
RETTIG, C (2007)
The Trouble With Enterprise Software. MIT Sloan Management Review, 49:1, p21-27.
RIVARD, S; RAYMOND, L; VERREAULT, D (2009)
IT and Organizational Performance – Resource-based view and competitive strategy: In
integrated model of the contribution of information technology to firm performance, Chapter
15, in Strategic Information Management: Challenges and Strategies in Managing Information
Systems, 4th Edition, Edited by Robert D. Galliers and Dorothy E. Leidner.
B. Duthie Page 96
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Information Technology and the Structuring of Organizations. Information Systems Research,
2:2, p143-169.
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Beyond the Business Case: New Approaches to IT Investment. MIT Sloan Management Review,
43:2, p51-59.
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Chief executives define their own data needs. Harvard Business Review. March-April, p81-93.
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Research Methods for Business Students. Prentice Hall, England.
SCHNEIDER, W.E (1994)
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Scenario Planning: A Tool for Strategic Thinking. MIT Sloan Management Review, 36:2, p25-40.
B. Duthie Page 97
SCHRAGE, M (1997)
The Real Problem with Computers. Harvard Business Review, Sept-Oct, p182-188.
SETHI, V; KING, W.R (1994)
Development of Measures to Assess the Extent to Which an Information Technology
Application Provides Competitive Advantage. Management Science, 40:12, p1601-1627.
SHENHAR, A.J; DVIR, D (2007)
Reinventing Project Management: The Diamond Approach to Successful Growth and
Innovation. Harvard Business School Press. U.S.A.
SHPILBERG, D; BEREZ, S; PURYEAR, R; SHAH, S (2007)
Avoiding the Alignment Trap in IT. MIT Sloan Management Review, 49:1, p51-58
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How IT Creates Business Value: A Process Theory Synthesis, Proceedings of the sixteenth
International Conference on Information Systems, p29-41.
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Fact or Fiction? A Sensemaking Perspective on the Reality Behind Executives’ Perception of IT
Business Value. Journal of Management Information Systems, 24:1, p13-54.
B. Duthie Page 98
TALLON, P.P (2008)
Does IT pay to focus? An analysis of IT business value under single and multi-focused business
strategies. Journal of Strategic Information Systems, (16), p278-300.
TALLON, P.P (2008)
A Process-Oriented Perspective on the Alignment of Information Technology and Business
Strategy. Journal of Management Information Systems, 24:3, p227-268.
TARAFDAR, M; GORDON, S.R. (2007)
Understanding the influence of information systems competencies on process innovation: A
resource-based view. Journal of Strategic Information Systems, 16, p353-392.
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Information strategy – Towards a comprehensive model of information strategy, Chapter 6,
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Information Systems, 4th Edition, Edited by Robert D. Galliers and Dorothy E. Leidner.
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B. Duthie Page 99
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A new framework for managing IT-enable business change. Information Systems Journal, 9:3,
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A Matrixed Approach to Designing IT Governance. MIT Sloan Management Review, 46:2, p26-
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IT Governance – Don’t just lead, Govern: How top-performing firms govern IT, Chapter 12,
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WHITTAKER, B (1999)
What went wrong? Unsuccessful information technology projects. Information Management &
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B. Duthie Page 100
7.0 APPENDIX A: Research Ethics Flowchart and Questionnaire
Ethics in Research
Process flow chart for students and staff undertaking research
Note: all research can potentially raise ethical issues. The focus here is on research involving human participants,
but consideration should also be given to ethical issues that may arise in connection with research that does not
involve human participants. In all cases research is governed by the University’s “Policy for the maintenance of
good practice in research” which is available at http://dbs-internal.dur.ac.uk/ethics and should be read in
conjunction with this process flow chart. This process flow chart applies to each discrete research project and it is
suggested that this flow chart is completed for each such project.
Please complete the details as requested below and highlight either ‘YES’ or ‘NO’ after each box to show your route
through the flow chart. “DBS SCE” refers to Durham Business School’s Sub-Committee for Ethics throughout.
Title of Project:
What is IT business value and how is it created? An exploratory study to determine key factors, metrics, and frameworks for improving business value from information technology.
Name of Principal Researcher
or anonymous code of student: ... Z0379178..............................................
Does the research involve
work in health/social care? Complete the necessary forms for
NHS ethics approval at
www.corec.org.uk and submit drafts
to DBS SCE at
dbs.ethics@durham.ac.uk for
approval in advance of submitting to
NHS
Have you obtained ESRC
funding?
Does the research involve human participants
and/or will the research put the researcher(s)
into a situation where the risks to the
researcher(s)’ health and safety are greater
than those normally incurred in everyday life?
Complete the “Research
Ethics Review Checklist”
available at http://dbs-
internal.dur.ac.uk/ethics
Have you answered
‘Yes’ to any of the
questions in the
“Research Ethics
Review Checklist”?
Do any other
significant ethics
issues arise?
Complete form REAF
available at http://dbs-
internal.dur.ac.uk/
ethics and submit it to
DBS SCE at
dbs.ethics@durham.a
c.uk
If you have obtained ESRC funding submit
the “Research Ethics Review Checklist” to
DBS SCE at dbs.ethics@durham.ac.uk;
otherwise file this flow chart and the
“Research Ethics Review Checklist” with
your research project. Students - discuss
this with your supervisor and get his/her
signature on the “Research Ethics Review
Checklist” and this flow chart
File this flow chart with
your research project.
Students – discuss
this flow chart with
your supervisor and
get his/her signature
YES
NO
NO
YES
NO
YES
NO YES
NOYES
Signature of Principal Researcher or Supervisor:
…………David Faulder (email confirmation)
B. Duthie Page 101
RESEARCH ETHICS REVIEW CHECKLIST
This checklist should be completed for every research project that involves human participants. It should
also be completed for all ESRC funded research, once funding has been obtained. It is used to identify
whether a full application for ethics approval needs to be submitted.
Before completing this form, please refer to the University’s Policy For The Maintenance Of Good Practice In
Research available at http://dbs-internal.dur.ac.uk/ethics/default.aspx. The principal investigator or, where the
principal investigator is a student, the supervisor is responsible for exercising appropriate professional
judgement in this review.
This checklist must be completed before potential participants are approached to take part in any research.
Section I: Project Details
1. Project title: What is IT business value and how is it created? An exploratory study to determine key factors, metrics, and frameworks for improving business value from information technology.
Section II: Applicant Details
2. Name of researcher (applicant)
or anonymous code of student: …… Z0379178…………….
3. Status (please delete those which are not applicable)
Taught Postgraduate Student
4. Email address
(staff only): …………………………………………………………………………………
5. Contact address: 13450 102nd
Avenue, Surrey, BC, Canada, V3T 5Y1
6. Telephone number: …011.604.466.8930…………………………………………...
Section III: For Students Only
7. Programme title: MA in Management……………………………………….
8. Mode (delete as appropriate)
Distance Learning
9. Supervisor’s or module leader’s name: …David Faulder……………………..
B. Duthie Page 102
10. Aims and Objectives: Please state the aims/objectives of the project
The aim of this research is to investigate if there are critical factors and components of IT strategy and execution
that contribute to the value and performance of organizations, and if so, to what extent. IT is becoming an
increasingly strategic dimension for most companies, industries. Traditional models (both from academics and
practice) are evolving toward a much more integrated view of IT than previous decades. Based on this trend, as
well as the ongoing rapid advances of technology, supports the need to develop additional perspectives to help
researchers and practitioners focus on the most relevant components of IT in order to maximise business value.
To make the investigation of this wide-spanning topic meaningful, the aim is broken down in the following way:
IT business value defined
IT business case traits defined
IT execution models critically appraised
Aligning IT execution with firm capabilities, structure, and characteristics
The reason it is interesting to look at the components and success factors of IT Business value is that IT seems to
be increasingly integrated into business strategy and required to help achieve business goals in the following
ways:
1) Improved analytical capabilities through scenario planning, game theory, system dynamics, agent-based
modeling, and real options
2) The need for extrapolation via road maps: focusing on products, technologies, and customer
requirements
3) Evaluating scenarios for business in the following domains: information and communication,
automation and control, power, transportation, medical, lighting, services, and materials
4) Linked with multifaceted influential stakeholders: individuals, society, politics, economy, environment,
technology, customers, competitors
5) Need for boosting IT agility and risk-resiliency
6) Need for ongoing skills development
7) Improved process efficiencies and effectiveness in a distributed manner
8) De-centralize decision making and empowering employees
9) Continuously reducing costs
B. Duthie Page 103
11. Methodology: Please describe in brief the methodology of the research project
12. Risk assessment: If the research will put the researcher(s) into a situation where risks to the
researcher(s)’ health and safety are greater than those normally incurred in everyday life, please
indicate what the risks are and how they will be mitigated
Supervisor: Please tick the appropriate boxes. The study should not begin until all boxes are ticked:
The topic merits further research
The participant information sheet or leaflet is appropriate (where applicable)
The procedures for recruitment and obtaining informed consent are appropriate (where applicable)
Comments from supervisor:
Section IV: Research Checklist
Please answer each question by ticking the appropriate box:
Standard Likert type Questionnaire to consenting adults; “information sheet” is basic covering
note.
The structure of the research is divided into four main sections, using a multi-method qualitative research approach:
1. Qualitative research in the form of a literature review where the building blocks and indicators of IT
business value are developed and investigated
2. Research strategy, methodology, and questionnaire design
3. Qualitative field research where it is tested whether the findings from the literature can be generalized
4. A section where the synthesis of literature and quantitative research is tied together into conclusions and
recommendations
At the end of this assessment, the goal is to provide observations supporting the need, both in practice and theory,
to continuously assess the components of IT business value in conjunction with the execution strategy and tactics to
better understand how to optimise IT contributions.
Not applicable
B. Duthie Page 104
YES NO
1 Does the study involve participants who are particularly vulnerable or unable to give
informed consent? (eg. children, people with learning disabilities, your own students)5
x
2 Will the study require the co-operation of a gatekeeper for the initial access to the
groups or individuals to be recruited? (eg. students at school, members of a self-help
group, residents of a nursing home)6
x
3 Will it be necessary for participants to take part in the study without their knowledge
and consent at the time? (eg. covert observation of people in non-public places)
x
4 Will the study involve discussion of sensitive topics? (eg. sexual activity, drug use)
x
5 Are drugs, placebos or other substances (eg. food substances, vitamins) to be
administered to the study participants or will the study involve invasive, intrusive or
potentially harmful procedures of any kind?
x
6 Will blood or tissue samples be obtained from participants?
x
7 Is pain or more than mild discomfort likely to result from the study?
x
8 Could the study induce psychological stress or anxiety or cause harm or negative
consequences beyond the risks encountered in normal life?
x
9 Will the study involve prolonged or repetitive testing?
x
10 Will financial inducements (other than reasonable expenses and compensation for
time) be offered to participants? 7
x
11 Will the study involve recruitment of patients or staff through the NHS? x
If you have answered ‘no’ to all questions: Undergraduate, MA and MSc students should retain a copy of the
form and submit it with their research report or dissertation. Work that is submitted without the
appropriate ethics form will be returned unassessed. MPhil/PhD students and members of staff should retain
a copy for their records. In each case Durham Business School’s Sub-Committee for Ethics (DBS SCE) may
request sight of the form.
5 Vulnerable persons are defined for these purposes as those who are legally incompetent to give informed
consent (i.e. those under the age of 16, although it is also good practice to obtain permission from all
participants under the age of 18 together with the assent of their parents or guardians), or those with a
mental illness or intellectual disability sufficient to prevent them from giving informed consent, or those who
are physically incapable of giving informed consent, or in situations where participants may be under some
degree of influence (e.g. your own students or those recruited via a gatekeeper - see footnote 2)
6 This applies only where the recruitment of participants is via a gatekeeper, thus giving rise to particular
ethical issues in relation to willing participation and influence on informed consent decisions particularly for
vulnerable individuals. It does not relate to situations where contact with individuals is established via a
manager but participants are willing and able to give informed consent. In such cases, the answer to this
question should be “No”
7 In experiments in economics and psychology in particular it is common to pay participants. Provided such
payments are within the normal parameters of the discipline, the answer to this question should be "No"
B. Duthie Page 105
If you have answered ‘yes’ to any of the questions in Section IV, you will need to describe more fully how you
plan to deal with the ethical issues raised by your research. This does not mean that you cannot do the research,
only that your proposal will need to be approved by the DBS SCE. You will need to submit your plans for
addressing the ethical issues raised by your proposal using the ethics approval application form REAF, which
should be sent to the committee at dbs.ethics@durham.ac.uk. Form REAF can be obtained from the School
Intranet site at http://dbs-internal.dur.ac.uk/Pages/Default.aspx or using the student / visitor access:
http://dbs-internal.dur.ac.uk/ethics
Username: dubs\ethicsvisitors
Password: durham
If you answered ‘yes’ to question 11 in Section IV, you will also have to submit an application to the
appropriate external health authority ethics committee, after you have received approval from the DBS SCE.
In such circumstances complete the appropriate external paperwork and submit this for review by the DBS
SCE to dbs.ethics@durham.ac.uk.
Please note that whatever answers you have given above, it is your responsibility to follow the University’s
“Policy For The Maintenance Of Good Practice In Research” and any relevant academic or professional
guidelines in the conduct of your study. This includes providing appropriate information sheets and consent
forms, and ensuring confidentiality in the storage and use of data. Any significant change in the question, design
or conduct over the course of the research should result in a review of research ethics issues using the
“Process Flow Chart for Students and Staff Undertaking Research” and completing a new version of this
checklist if necessary.
Declaration
Signed
(staff only, students insert anonymous code): ……06/0205……………………………………………………….
Date: 21 September 2009………………………………………………
Student / Principal Investigator
Signed: ……David Faulder (confirmation by email)
Date: 21 September 2009
Supervisor or module leader (where appropriate)
Survey Questionnaire and Raw Data Responses:
B. Duthie Page 106
8.0 APPENDIX B: Survey Questionnaire
Email Introduction:
Bruce Duthie's Masters Dissertation Research Questionnaire:
How IT contributes value to the business
Link to:
Research Questionnaire
Dear business and IT professionals:
This questionnaire is part of a research project to understand how IT contributes to business value. Your responses are important in enabling me to obtain as full an understanding as possible of this topical issue.
The questionnaire should take you about 15-20 minutes to complete. Please answer the questions with one firm in mind that you've worked or consulted for within the past 3-5 years. It is important not to answer the questions with different firms in mind due to relationships between questions.
The findings from your questionnaire and others will be used as one of the main data sets for my Masters in Management degree studies at the University of Durham Business School (UK).
I hope you will find completing the questionnaire enjoyable. Please complete the questionnaire by September 25, 2009. The link to the survey is on the left hand side of this web page. If you have any queries or would like further information, please contact me directly at: 604.466.8930 or bruce.duthie@durham.ac.uk.
Thank you for your help.
Bruce Duthie
Masters in Management Candiate
Durham Business School
B. Duthie Page 107
Survey Question Options Sum
Response ID
SUM Which best describes the industry in which we compete?
Manufacturing / Supply Chain / Distribution 5
Professional Services / Consulting 6
Aerospace 0
Healthcare 1
Government 2
Computers / Software / Hardware / Telecom 6
Banking 12
Consumer Packaged 0
Retail 0
Construction / Architecture / Design 0
Other 0
Comment 0
The number of employees in our firm is between:
0 - 100 5
101 - 499 6
500 - 999 3
1000 - 4999 16
> 5000 6
Other 35000
Comment 0
Annual firm revenue is between:
0 - $1M 3
$1M - $10M 0
$11M - $50M 10
$51M - $100 4
> $100M 19
Other 2E+10
Comment 0
Which best describes your role?
Executive 6
Sr. Management / Director 18
B. Duthie Page 108
Consultant 6
Project Manager 2
Analyst / Business SME 2
Other 0
At the centre of our operation is a customer-centric, offer-enabling technology Strongly disagree 3
Disagree 7
Agree 11
Strongly Agree 16
Don't know 0
Comment 0
Our business seeks to acquire customer bases of hundreds of thousands to millions of customers, with scores of transactions per consumer per year.
Strongly disagree 7
Disagree 5
Agree 11
Strongly Agree 14
Don't know 0
Comment 0
Our business specialises in serving volume through standardised products and transactions
Strongly disagree 1
Disagree 10
Agree 13
Strongly Agree 13
Don't know 0
Comment 0
Our technology primarily consists of specific applications that align offerings to a given market segments needs
Strongly disagree 0
Disagree 5
Agree 17
B. Duthie Page 109
Strongly Agree 14
Don't know 1
Comment 0
Our business seeks to grow its customer base from tens to hundreds to perhaps thousands of customers, with no more than a handful of transactions per customer per year
Strongly disagree 8
Disagree 12
Agree 11
Strongly Agree 4
Don't know 2
Comment 0
Our business specialises in tackling complex problems and coming up with individualised solutions with a high proportion of consultative services Strongly disagree 4
Disagree 11
Agree 14
Strongly Agree 8
Don't know 0
Comment 0
Our technology investments allows for reuse or increased output of existing capital Strongly disagree 0
Disagree 6
Agree 20
Strongly Agree 10
Don't know 1
Comment 0
We prioritise amoung various aspects of our IT strategy
Strongly disagree 1
Disagree 8
Agree 15
Strongly Agree 12
Don't know 1
B. Duthie Page 110
Comment 0
We have information systems that pinpoint the investments to be made and their relative benefits
Strongly disagree 2
Disagree 17
Agree 10
Strongly Agree 8
Don't know 0
Comment 0
We have a disciplined process for evaluating proposed IT investments, and we follow the process
Strongly disagree 1
Disagree 11
Agree 16
Strongly Agree 9
Don't know 0
Comment 0
We translate strategic language into investment criteria
Strongly disagree 0
Disagree 11
Agree 15
Strongly Agree 9
Don't know 2
Comment 0
We know what investments to make in support of our strategy, and we focus on strategic fit in making IT investments
Strongly disagree 0
Disagree 9
Agree 18
Strongly Agree 10
Don't know 0
B. Duthie Page 111
We evaluate IT investments based on the following tangible and intangible metrics (select all applicable)
Competitive advantage potential 28
Service to Society 7
Job Enrichment 7
Quality Improvement 21
Improve Customer Relationship 29
Securing Future Business 20
Risk of Not Investing in IT 10
Teamwork 6
Budgets 21
Priority of Investment 15
Net Present Value 8
Product Cost 14
Current Profit Level 7
Current Revenue 9
Alternate technology 10
Labour / Effort required 16
Inventory 4
Implementation Time 18
Defective rate of existing products 8
Our IT strategic projects have created increases in (select all applicable) Revenue 16
Productivity 20
Profit 15
Capacity 24
Speed 22
Flexibility 22
Market appeal 17
Other 0
Our IT strategic projects have created decreases in (select all applicable) Software development or operating costs 19
Time to market 18
Time to benefit 10
Product cost 14
Product failures 8
Service delivery cost 24
Other 0
B. Duthie Page 112
Our technology investments protects against potential loss or exposure
Strongly disagree 1
Disagree 6
Agree 18
Strongly Agree 11
Don't know 1
Comment 0
Our technology investments directly leads to incremental revenue
Strongly disagree 0
Disagree 13
Agree 15
Strongly Agree 8
Don't know 1
Comment 0
Our technology investments allows workers to change behaviour Strongly disagree 0
Disagree 3
Agree 23
Strongly Agree 10
Don't know 1
Comment 0
Our technology investments comply with government regulation
Strongly disagree 1
Disagree 0
Agree 17
Strongly Agree 18
Don't know 1
Comment 0
Our IT allocates sufficient budget to spend on IT research through an innovation lab Strongly disagree 9
Disagree 19
Agree 3
Strongly Agree 6
Don't know 0
Comment 0
B. Duthie Page 113
Our IT budgets include a sufficient component for IT staff training and education Strongly disagree 4
Disagree 14
Agree 16
Strongly Agree 3
Don't know 0
Comment 0
Our IT provides efficient solution delivery based on projects completed within agreed SLA Strongly disagree 1
Disagree 13
Agree 17
Strongly Agree 5
Don't know 1
Comment 0
Our IT operations are efficient in resolving production problems
Strongly disagree 0
Disagree 7
Agree 21
Strongly Agree 9
Don't know 0
Comment 0
Our IT enables strategic improvements Strongly disagree 0
Disagree 8
Agree 18
Strongly Agree 10
Don't know 1
Comment 0
Our IT delivers business value from new projects based on financial measures (NPV, ROI, etc) Strongly disagree 0
Disagree 9
Agree 19
Strongly Agree 7
Don't know 2
Comment 0
Our IT builds partnerships with users Strongly disagree 1
Disagree 5
B. Duthie Page 114
Agree 17
Strongly Agree 13
Don't know 1
Comment 0
Our IT management use scenario planning to capture multiple futures and assess their impacts on architecture and application landscapes Strongly disagree 3
Disagree 14
Agree 11
Strongly Agree 5
Don't know 4
Comment 0
Our IT harnesses information and leading indicators from their markets, partners, and employees
Strongly disagree 0
Disagree 14
Agree 14
Strongly Agree 9
Don't know 0
Comment 0
Our IT enables business model innovation
Strongly disagree 1
Disagree 10
Agree 18
Strongly Agree 7
Don't know 1
Comment 0
Our project management process is consistent and scalable to fit the size of projects we manage
Strongly disagree 1
Disagree 12
Agree 15
Strongly agree 9
Don't know 0
B. Duthie Page 115
Comment 0
Our project management processes operate under the business strategy priorities and deliver agreed-on objectives for time, cost, and deliverables
Strongly disagree 0
Disagree 12
Agree 17
Strongly Agree 8
Don't know 0
Comment 0
Managers and leaders support projects and provide resources, clear direction, and sponsorship when needed.
Strongly disagree 1
Disagree 11
Agree 14
Strongly Agree 11
Don't know 0
Comment 0
New projects consider degree of newness to the business. I.e. an improvement to existing product, a new generation product, a new-to-the-world product
Strongly disagree 1
Disagree 5
Agree 20
Strongly Agree 9
Don't know 2
Comment 0
New projects consider the level of new technology involved. I.e. Low-tech, medium tech, high-tech, super-high tech
Strongly disagree 0
B. Duthie Page 116
Disagree 5
Agree 22
Strongly Agree 9
Don't know 1
Comment 0
New projects consider the pace at which the project needs to be delivered. I.e Regular, Fast/competitive, Time-critical, Blitz.
Strongly disagree 0
Disagree 7
Agree 20
Strongly Agree 10
Don't know 0
Comment 0
New projects consider the degree of complexity involved with implementing. I.e Impact to single function, Impact to multiple functions, Impact to entire enterprise.
Strongly disagree 1
Disagree 6
Agree 20
Strongly Agree 9
Don't know 1
Comment 0
Systems are in place that provide benefit realisation data and information for projects
Strongly disagree 2
Disagree 14
Agree 14
Strongly Agree 6
Don't know 1
Comment 0
B. Duthie Page 117
Changes to operational processes due to project activities are a part of a disciplined process of change management
Strongly disagree 1
Disagree 8
Agree 16
Strongly Agree 11
Don't know 1
Comment 0
Information is readily available for the measurement of project implementation effectiveness (benefits realisation)
Strongly disagree 2
Disagree 17
Agree 10
Strongly Agree 8
Don't know 0
Comment 0
Project completion is made clear (we know when we are done)
Strongly disagree 0
Disagree 12
Agree 15
Strongly Agree 10
Don't know 0
Comment 0
We consciously restrict our IT investments to avoid attempting to become all things to all people
Strongly disagree 1
Disagree 7
Agree 21
Strongly Agree 5
Don't know 0
Comment 0
B. Duthie Page 118
Management and leadership ensure support for smooth implementaiton of project outputs based on stakeholder needs
Strongly disagree 0
Disagree 6
Agree 21
Strongly Agree 7
Don't know 0
Comment 0
Which best decribes your firms' IT maturity
Continuously improving process 15
Predictable process 5
Standard, consistent process 13
Disciplined process 1
Comment 0
Our IT enables predictive modeling to identify the most profitable customers - as well as those with the greatest profit potential and the ones most likely to cancel their accounts
Strongly disagree 1
Disagree 19
Agree 8
Strongly Agree 4
Don't know 2
Comment 0
Our IT integrates data generated in-house with data acquired from outside sources for a comprehensive understanding of customers
Strongly disagree 1
Disagree 16
Agree 10
Strongly Agree 6
Don't know 1
B. Duthie Page 119
Comment 0
Our IT enables the analysis of historical sales and pricing trends to establish prices in real time and get the highest yield possible from each transaction
Strongly disagree 2
Disagree 15
Agree 12
Strongly Agree 4
Don't know 1
Comment 0
Our IT uses sophisticated experiments to measure the overall impact of advertising and other marketing strategies and then apply their insights to future analyses.
Strongly disagree 5
Disagree 12
Agree 8
Strongly Agree 3
Don't know 6
Comment 0
Our IT managers focus on improving processes and business performance, not culling data from reports and transaction systems
Strongly disagree 2
Disagree 8
Agree 19
Strongly Agree 4
Don't know 1
Comment 0
Our knowledge workers spend their time analysing data and understanding its implications rather than collecting and formulating data Strongly disagree 2
Disagree 10
Agree 12
B. Duthie Page 120
Strongly Agree 5
Don't know 5
Comment 0
The firm manages data as a strategic corporate resource in all business initiatives Strongly disagree 3
Disagree 10
Agree 13
Strongly Agree 4
Don't know 4
Comment 0
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