how does it contribute value to the business

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

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unpublished work of others, which is referred to in the dissertation, is credited to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

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

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

To my wife Lisa,

My one and only true love.

B. Duthie

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

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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.

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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

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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

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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:

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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).

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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

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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.

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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).

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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

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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.

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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

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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).

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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

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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


Labour / Effort required

Inventory

Implementation Time

Defective rate of existing products

Components and metrics involved in evaluating IT investment options

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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

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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

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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.

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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

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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

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hav

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eat

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crea

ses

in:

Ou

r IT

str

ateg

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roje

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hav

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eat

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How is IT business value-generation measured?

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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).

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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”

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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

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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

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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).

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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

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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.

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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

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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.

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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

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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


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

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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

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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?

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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

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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.

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• 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?

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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:

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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

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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.

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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

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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

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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.

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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.

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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

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union between theory and practice sets the agenda for a proactive culture to understand

problems and generate the appropriate invested attention (Learmonth, 2007).

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Chapter 4 in, in Strategic Information Management: Challenges and Strategies in Managing

Information Systems, 4th Edition, Edited by Robert D. Galliers and Dorothy E. Leidner.

EWUSI-MENSAH, K (1997)

Critical Issues in Abandoned Information systems development projects. Communications of

the ACM, 40:9, p74-80.

ERICKSON, J; HUGHES, L; FORBUSH, N (2004)

A disciplined approach for quantifying technology benefits. Forrester Research.

FEENY, D.F; WILLCOCKS, L.P (1998)

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21.

FERGUSON, G; MATHUR, S; SHAH, B (2005)

Evolving from Information to Insight. MIT Sloan Management Review, 46:2, p51-58.

B. Duthie

GALLIERS, R.D (1999)

Towards the Integration of e-Business, Knowledge Management and Policy Considerations

within an Information Systems Strategy Framework. Journal of Strategic Information Systems,

8:3, p229-34.

GOTTSCHALK, P (1999)

Implementation of Formal Plans: the Case of Information Technology Strategy. Long Range

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GLIEDMAN, C. (2008)

The Total Economic Impact Methodology: A Foundation for Sound Technology Investments.

Forrester Research.

HALLOWELL, R.; APPLEGATE, L.M (2004).

Transforming Singapore's public libraries (Abridged). Case Study 9-802-028. Boston: Harvard

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HAMEL, G; BREEN, B (2007)

The Future of Management. Harvard Business School Press. U.S.A.

HAMEL, G. (2009)

Moon Shots for Management. Harvard Business Review. Feb2009, p91-99.

HAMMER, M; CHAMPY, J (2003)

Reengineering the Corporation: A Manifesto for Business Revolution. HarperCollins Publishing

Inc. New York.

HENDERSON, J; VENKATRAMAN, N (1993)

Strategic Alignment: Leveraging Information Technology for Transforming Organizations. IBM

Systems Journal, 32:1, p4-17.

HUANG,Y-H; LI, E.Y; CHEN, J.S (2009)

Information synergy as the catalyst between information technology capability and

innovativeness: empirical evidence from the financial services sector. Information Research,

14:1.

HUGHES, A; MORTON, M.S.S (2006)

The Transforming Power of Complementary Assets. MIT Sloan Management Review, 47:4, p50-

58.

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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

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

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

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.

B. Duthie

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.

B. Duthie

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.

PORTER, M.E (2008)

The Five Competitive Forces that Shape Strategy. Harvard Business Review, Jan., p79-93.

PORTER, M.E.; MILLAR, V.E (1985)

How Information Gives You Competitive Advantage. Harvard Business Review. Jul-Aug, p149-

174.

POWELL, T.C; DENT-MICALLEF, A. (1997)

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

PRICEWATERHOUSE COOPERS (2009)

Banking On Change: Technology and Operations Excellence in a post-financial crisis world.

Financial Services Research Institute. September.

RADJOU, N (2006)

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

ROBEY, B (1991)

Information Technology and the Structuring of Organizations. Information Systems Research,

2:2, p143-169.

ROSS, J.W; BEATH, C.M (2002)

Beyond the Business Case: New Approaches to IT Investment. MIT Sloan Management Review,

43:2, p51-59.

ROCKART, J.F (1979)

Chief executives define their own data needs. Harvard Business Review. March-April, p81-93.

SAUNDERS, M; LEWIS, P; THORNHILL, A (2007)

Research Methods for Business Students. Prentice Hall, England.

SCHNEIDER, W.E (1994)

The Reengineering Alternative: A Plan for Making Your Current Culture Work. Irwin Publishing.

U.S.A.

SCHOEMAKER, P.J.H (1995)

Scenario Planning: A Tool for Strategic Thinking. MIT Sloan Management Review, 36:2, p25-40.

B. Duthie

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

SOH, C; MARKUS, M.L (1995)

How IT Creates Business Value: A Process Theory Synthesis, Proceedings of the sixteenth

International Conference on Information Systems, p29-41.

TALLON, P.P; KRAEMER, K.L (2007)

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

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.

TEUBNER, A; MOCKER, M (2009)

Information strategy – Towards a comprehensive model of information strategy, Chapter 6,

p147-170, in Strategic Information Management: Challenges and Strategies in Managing


WACK, P (1985)

Scenarios: unchartered waters ahead. Harvard Business Review, Sept/Oct, p73-89.

WADE, M; HULLAND, J (2004)

The Resource-based View and Information Systems Research: Review, Extension, and

Suggestions for Future Research. MIS Quarterly, 28:1, p107-142.

B. Duthie

WARD, J; ELVIN, R (2001)

A new framework for managing IT-enable business change. Information Systems Journal, 9:3,

p197-221.

WEILL, P; ROSS, J (2005)

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,

p286-308, in Strategic Information Management: Challenges and Strategies in Managing


WHITTAKER, B (1999)

What went wrong? Unsuccessful information technology projects. Information Management &

Computer Security, 7:1, p23-29.

B. Duthie

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

[email protected] 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

[email protected]

c.uk

If you have obtained ESRC funding submit

the “Research Ethics Review Checklist” to

DBS SCE at [email protected];

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)

http://dbs-internal.dur.ac.uk/ethics

B. Duthie

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……………………..

http://dbs-internal.dur.ac.uk/ethics/default.aspx

B. Duthie

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

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

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

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 [email protected]. 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:


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 [email protected].

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:

mailto:[email protected]

http://dbs-internal.dur.ac.uk/Pages/Default.aspx



B. Duthie

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 [email protected].

Thank you for your help.

Bruce Duthie

Masters in Management Candiate

Durham Business School

https://exdurf.dur.ac.uk/exchweb/bin/redir.asp?URL=http://rs6.net/tn.jsp?et=1102716908024%26s=10%26e=001VxbRvo0izOZU1AcvhFT6OIQ_4i1tPh64VB9P2Rw3whXmTvagttmlF9PaoOIJeugF3q-l1sueq393qC5ZeevKmYXVG9Hg-vQRaQisnalKlYxg7AsqGqAVKBRL8gDczx8ezTVtuWlIWB52URKmDEhz1TjvmAFkEk4uVoQ6EnaRy4-zagdnzWnsNAxcz5g1uQ_k8gPZPgzcL0VVa3f5L6NDZdcxRnC2WyagzyfQioveKIEeM1iEgYdCDA==


B. Duthie

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

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

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

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

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

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

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

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

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

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

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

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

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

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

how does it contribute value to the business

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