Strategic IT Investment Decisions

2011 ◽  
pp. 3589-3593
Author(s):  
Tzu-Chuan Chou ◽  
Robert G. Dyson ◽  
Philip L. Powell
Keyword(s):  
Organizational Performance ◽  
Decision Process ◽  
Investment Decision ◽  
Investment Decisions ◽  
Decision Processes ◽  
It Investment ◽  
Strategic Investment ◽  
Integrative Framework ◽  
Concept Of Information ◽  
Information Intensity

As many as half the decisions taken in organizations result in failure (Nutt, 1999). As information technology (IT) assumes a greater prominence in firms’ strategic portfolios, managers need to pay more attention to managing the technology. However, while IT can have a significant impact on organizational performance, it can also be a major inhibitor of change and can be a resource-hungry investment that often disappoints. Organizations can best influence the success of IT projects at the decision stage by rejecting poor ones and accepting beneficial ones. This may enable better implementation, as Nutt (1999) suggests most decision failures are due to implementation failure that tends to be under managers’ control. However, little is known about IT decision processes. Research demonstrates the importance of managing strategic IT investment decisions (SITIDs) effectively. SITIDs form part of the wider range of corporate strategic investment decisions (SIDs) that cover all aspects in which the organization might wish to invest. Strategic investment decisions will have different degrees of IT intensity that may impact outcome. IT investment intensity is the degree to which IT is present in an investment decision. That is, some decisions will be wholly about IT investments while others will have little or no IT—most, though, will be blended programs of IT and non-IT elements. Here, IT investment intensity is defined as the ratio of IT spending to total investment. The higher the IT investment intensity, the more important IT is to the whole investment. For example, Chou, Dyson, and Powell (1997) find IT investment intensity to be negatively associated with SID effectiveness. The concept of IT intensity is similar to, but also somewhat different from, the concept of information intensity. Information intensity is the degree to which information is present in the product or service (Porter & Millar, 1985). Management may use different processes in order to make different types of decisions (Dean & Sharfman, 1996). The link between decision process and outcome is so intimate that “the process is itself an outcome” (Mohr, 1982, p. 34). This may imply that the link between IT investment intensity and SID effectiveness is not direct but that the impact of IT investment intensity may be through the decision process. If different IT intensity in projects leads to different decision processes, leading to different outcomes, then it is important to know what factors act in this, in evaluating and managing SITIDs. This chapter presents an integrative framework for exploring the IT investment intensity-SID effectiveness relationship.

Managing Strategic IT Investment Decisions

2005 ◽  
pp. 1875-1879
Author(s):  
Tzu-Chuan Chou ◽  
Robert G. Dyson ◽  
Philip L. Powell
Keyword(s):  
Organizational Performance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Decision Processes ◽  
It Investment ◽  
Strategic Investment ◽  
Intensity Information ◽  
Total Investment ◽  
Concept Of Information ◽  
Information Intensity

IT can have a significant impact on organizational performance, but it can also be a major inhibitor of change and can be a resource-hungry investment that often disappoints. Organizations can best influence the success of IT projects at the decision stage by rejecting poor ones and accepting beneficial ones. However, little is known about IT decision processes. Research demonstrates the importance of managing strategic IT investment decisions (SITIDs) effectively. SITIDs form part of the wider range of corporate strategic investment decisions (SIDs) that cover all aspects that the organization might wish to invest in. SIDs will then have different degrees of IT intensity that may impact on outcome. IT investment intensity is the degree to which IT is present in an investment decision. Here, IT investment intensity is defined as the ratio of IT spending to total investment. The higher IT investment intensity, the more important IT is to the whole investment. For example, Chou et al. (1997) find IT investment intensity to be negatively associated with SID effectiveness. The concept of IT intensity is similar to, but also somewhat different from, the concept of information intensity. Information intensity may be defined as the degree to which information is present in the product or service of a business (Porter & Millar, 1985).

AMERIREAL Corporation

2011 ◽  
pp. 21-31
Author(s):  
Mo Adam Mahmood ◽  
Gary J. Mann ◽  
Mark Dubrow
Keyword(s):  
Information Technology ◽  
Organizational Performance ◽  
Investment Decisions ◽  
Optimal Investment ◽  
Student Thinking ◽  
It Investment ◽  
The Subject ◽  
Case Based

This instructional case, based on an actual firm’s experience (name changed) is intended to challenge student thinking with regard to the extent to which information technology (IT) can demonstrably contribute to organizational performance and productivity, and to which users of IT can relate their investment decisions to measurable outcomes. Relationships between an organization’s investment in IT and the effect of such investments on the organization’s performance and productivity have long been the subject of discussion and research. Managers, interested in knowing the “payoff” of such investments, are continually seeking answers to this question. A failure to understand the benefits of IT investment, or an over- or under-estimation of the benefits of a planned investment in IT relative to the costs, will likely result in less than optimal investment decisions.

Managing Strategic IT Investment Decisions From IT Investment Intensity to Effectiveness

2002 ◽  
pp. 141-157
Author(s):  
Tzu-Chuan Chou ◽  
Robert G. Dyson ◽  
Philip L. Powell
Keyword(s):  
Decision Making ◽  
Information Technology ◽  
Analytical Model ◽  
Investment Decisions ◽  
Evaluation Process ◽  
Empirical Testing ◽  
It Investment ◽  
Organizational Decision Making ◽  
Information Technology Projects ◽  
Strategic Investment

Many information technology projects fail, especially those intended as strategic. Yet, there is little research that attempts to explain the link between the IT investment intensity of strategic investment decisions (SIDs) and organizational decision-making, in order to understand this phenomenon. This paper proposes an analytical model employing a number of constructs: effectiveness of decisions, interaction and involvement in the decision-formulating process, accuracy of information and strategic considerations in the evaluation process, rarity of decisions, and the degree of IT intensity of an investment in strategic investment decisions. The model explores the relationships influencing the effectiveness of decisions. Empirical testing is based on a sample of 80 SIDs from Taiwanese enterprises. The results show that interaction, accuracy of information, and strategic considerations are mediators in the linkage of IT investment intensity and the effectiveness of SIDs. The implications of these findings for the management of strategic IT investment decisions are discussed.

AMERIREAL Corporation

2011 ◽  
pp. 98-109
Author(s):  
Mo Adam Mahmood ◽  
Gary J. Mann ◽  
Mark Dubrow
Keyword(s):  
Information Technology ◽  
Organizational Performance ◽  
Investment Decisions ◽  
Optimal Investment ◽  
Student Thinking ◽  
It Investment ◽  
The Subject ◽  
Case Based

This instructional case, based on an actual firm’s experience (name changed), is intended to challenge student thinking with regard to the extent to which information technology (IT) can demonstrably contribute to organizational performance and productivity and to which users of IT can relate their investment decisions to measurable outcomes. Relationships between an organization’s investment in IT and the effect of such investments on the organization’s performance and productivity have long been the subject of discussion and research. Managers, interested in knowing the “payoff” of such investments, are continually seeking answers to this question. A failure to understand the benefits of IT investment, or an over- or under-estimation of the benefits of a planned investment in IT relative to the costs, will likely result in less than optimal investment decisions.

Advanced Manufacturing Technology: Investment Decision Process. Part I

1990 ◽  
Vol 28 (1) ◽  
Author(s):  
K. Swann ◽  
W.D. O′Keefe
Keyword(s):  
Decision Process ◽  
Investment Decision ◽  
Investment Decisions ◽  
Manufacturing Technology ◽  
Advanced Manufacturing Technology ◽  
Advanced Manufacturing ◽  
Costs And Benefits ◽  
Technology Investment

This article is the first half of a series concerning advanced manufacturing technology (AMT) investment decisions. Individual problems with formalised techniques in this field are reduced by the frequency of their joint use in organisations. The article emphasises that it is important to appreciate that the nature, costs and benefits of AMT are complex and the systems have a far‐reaching impact on the organisation.

Framework Based on Benefits Management and Enterprise Architecture

2014 ◽  
pp. 289-309
Author(s):  
António Rodrigues ◽  
Henrique O’Neill
Keyword(s):  
Enterprise Architecture ◽  
Investment Decisions ◽  
Public Cloud ◽  
It Infrastructure ◽  
Private Cloud ◽  
It Investment ◽  
Strategic Investment ◽  
The Public ◽  
International Bank

In 2010, a framework aiming to address strategic investment decisions on IT infrastructure was developed. It was based in Benefits Management principles and Enterprise Architecture concepts, being inspired by the emerging public cloud technological trend. Meanwhile, the public cloud concept did not materialise at the expected pace and other alternatives have emerged in the market, in particular the private cloud-based solutions. This fact required the framework to be updated to cope with the business and technological requirements of the private cloud concept. A new version of the framework has been developed and was used to help managers to address IT investment decisions on private cloud in an international bank.

The Value of Managerial Flexibility in Strategic IT Investment

2011 ◽  
pp. 111-132 ◽  
Author(s):  
Xiaotong Li ◽  
John D. Johnson
Keyword(s):  
Real Options ◽  
Investment Decision ◽  
Investment Decisions ◽  
It Investment ◽  
Real Options Theory ◽  
Investment Evaluation ◽  
Managerial Flexibility ◽  
Investment Opportunities ◽  
The Relationship ◽  
Options Theory

In this chapter, we discuss the real options theory and its applications in IT investment evaluation. We provide a framework within which the appropriateness of using real options theory in strategic IT investment evaluation is systematically justified. In our framework, IT investment opportunities are classified into four categories based on two criteria: the technology switching costs and the nature of competition. We point out that different real options models should be adopted for each category. The electronic brokerage’s investment decision in wireless technology is discussed as a real-world case within the framework. Our study also provides some insights about the relationship between technology standardization and IT investment decisions.

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