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.

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.

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 firms 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 organizations investment in IT and the effect of such investments on the organizations 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.

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.

Performance Implications of Internet-based Information Technology in Value Chain Management

2015 ◽  
Vol 8 (2) ◽  
pp. 1-13 ◽  
Author(s):  
Howard S. Rasheed ◽  
Hassan Rasheed
Keyword(s):  
Information Technology ◽  
Organizational Performance ◽  
Value Chain ◽  
It Investment ◽  
Chain Management ◽  
Impact Performance ◽  
Value Chain Management ◽  
Doing Business ◽  
Multiple Issues ◽  
The Relationship

Internet-based information technology (I-IT) has become an integral part of the value chain for many firms, increasing the efficiency of existing activities and enabling new modes of doing business. Despite a significant amount of research on I-IT, however, its exact impact on firm performance has yet to be resolved. This study examines multiple issues regarding the relationship between I-IT investment made in support of value chain management and organizational performance as judged by profit and productivity. Conclusions are offered regarding the strength of this type of investment as a performance predictor, the types of firms for which it does improve performance and what modes of I-IT investment produce the greatest results. Data from 165 firms indicate that investment in I-IT can positively impact performance depending on the type of industry and the type of supply chain function being supported. In particular, results indicate that firms in industries such as banking and insurance stand to benefit most from the use of I-IT. This study also provides useful recommendations for how firms should design and deploy their I-IT resources for value chain management that maximizes their return on investment. Due to the importance of the internet in global economic development, the implications of this study are significant.

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).

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.

Organizational Performance and IT Investment Intensity of South African Companies

2008 ◽  
pp. 3129-3136
Author(s):  
Johan Nel
Keyword(s):  
Information Technology ◽  
Organizational Performance ◽  
South African ◽  
Operating Cost ◽  
Case Study Research ◽  
Operating Costs ◽  
Company Performance ◽  
It Investment ◽  
Study Research

This chapter considers if a link exists between company performance and information technology (IT) investment intensity in selected South African companies. The study, which covered the period 1989–1991, was based on the hypotheses viz: that in top performing companies (1) IT costs as proportions of operating costs were higher; (2) IT costs as a proportion of turnover was lower, than in weak performing companies; and (3) that a positive correlation exists between the computerization index and operating cost efficiency ratio. Evidence is presented that company performance was linked to the level of IT investment intensity in a sample of organizations in the RSA. Findings of later case study research supporting this are also presented.

Organizational Performance and IT Investment Intensity of South African Companies

2011 ◽  
pp. 137-146
Author(s):  
Johan Nel
Keyword(s):  
Information Technology ◽  
Organizational Performance ◽  
South African ◽  
Operating Cost ◽  
Case Study Research ◽  
Operating Costs ◽  
Company Performance ◽  
It Investment ◽  
Study Research

This chapter considers if a link exists between company performance and information technology (IT) investment intensity in selected South African companies. The study, which covered the period 1989–1991, was based on the hypotheses viz: that in top performing companies (1) IT costs as proportions of operating costs were higher; (2) IT costs as a proportion of turnover was lower, than in weak performing companies; and (3) that a positive correlation exists between the computerization index and operating cost efficiency ratio. Evidence is presented that company performance was linked to the level of IT investment intensity in a sample of organizations in the RSA. Findings of later case study research supporting this are also presented.

The Evaluation of Risky Information Technology Investment Decisions

2004 ◽  
Vol 18 (1) ◽  
pp. 53-66 ◽  
Author(s):  
Jacob M. Rose ◽  
Anna M. Rose ◽  
Carolyn Strand Norman
Keyword(s):  
Information Technology ◽  
Prospect Theory ◽  
Investment Decisions ◽  
Decision Makers ◽  
Risk Averse ◽  
It Investment ◽  
Technology Investment ◽  
Risk Seeking ◽  
Information Technology Investment ◽  
Domain Information

This research proposes that the risk preferences of decision evaluators and the decision “domain” systematically influence evaluations of decision makers' information technology (IT) investment decisions. Results of an experiment with 160 M.B.A. student participants indicate that risk-seeking evaluators rate IT investment decisions higher than do risk-averse evaluators. Further, decision evaluators are influenced by the gain and loss decision domains when evaluating a decision maker's risky information technology investment decisions. The findings indicate that providing decision domain information to decision evaluators leads to systematic differences in IT investment evaluations. A key contribution of this study is the discovery of the relevance of prospect theory to IT evaluation processes.

INFORMATION TECHNOLOGY INVESTMENT DECISIONS UNDER ASYMMETRIC INFORMATION: A MODIFIED RATIONAL EXPECTATION MODEL

2009 ◽  
Vol 08 (01) ◽  
pp. 55-72 ◽  
Author(s):  
JINLAN NI ◽  
DEEPAK KHAZANCHI
Keyword(s):  
Information Technology ◽  
Information Asymmetry ◽  
Rational Expectation ◽  
Investment Decisions ◽  
Capital Outlay ◽  
Market Uncertainty ◽  
It Investment ◽  
Initial Capital ◽  
Expectation Model ◽  
Different Levels

In this paper, we propose that information technology (IT) managers make investment decisions about new IT initiatives based on a modified rational expectation model. Unlike traditional rational expectation models, we emphasize the relevance of market uncertainty and its impact on the return of new IT investment. This results in information acquisition decisions by managers that can cause information asymmetry. This information asymmetry is endogenous and so the IT manager can become well informed if and only if it is beneficial to do so. We also capture different levels of IT investment across managers by introducing heterogeneity across managers in terms of different levels of initial capital. Based on a simulation analysis to validate our theoretical model, we find that it is the IT manager with larger initial capital outlay who is particularly interested in acquiring information about their IT investments in order to reduce any asymmetry with competitors. Furthermore, we find that holding other things constant, fewer IT investors are informed when information cost increases and in consequence the difference of investment level between the informed and uninformed investors is more pronounced.

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