The transformational dimension in the realization of business value from information technology (original) (raw)
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Refocusing where and how IT value is realized: An empirical investigation
Omega-international Journal of Management Science - OMEGA-INT J MANAGE SCI, 1996
This study examines the direct and interaction effects of IT investments and IS department efficiency on different facets of firm performance. Specifically, measures for financial, sales, and intermediate firm performance are considered. IS budget is used as a measure of IT investment; asset turnover and labor productivity are used as intermediate performance measures; and sales per IS employee and income per IS employee are used as measures of IS department efficiency. Secondary sources were used to construct a database of 210 firms, which was used for statistical analysis. Our results suggest that; (i) IS budget is not related to financial firm performance, but is positively related to sales performance; (ii) The results for intermediate performance were mixed; (iii) IS efficiency had no impact on the relationship between IS budget and firm performance measures, except market share. Analysis of the results suggest that the effect of IT investments should be assessed simultaneously on both aggregate and intermediate performance. Furthermore, IS departments with ‘high’ efficiency may be unable to better leverage each additional dollar spent on IT. This has significant implications for organizations considering radical downsizing and elimination of their IS departments, as in the process they could reduce their conversion effectiveness.
Since the ongoing proliferation of information technology (IT) in our private and professional lives, researchers have been concerned with the conceptualization and measurement of the " value " that technology brings us. To this end, researchers have based their assumptions and theories on the technological achievements and perceptions of technology at that time. Ever since the introduction of smart phones, broadband Internet, and social networks, much has changed in the way we perceive and appropriate IT value. In order to identify possible white spots for future research, we present a systematic literature review of the past 10 years of research in this area. In doing so, we develop a taxonomy for analyzing the IT value literature. The results of our analysis indicate that the majority of current work focuses on ex post measurement of the monetary value of IT for businesses. Only a few articles were found that employed an alternative lens in defining IT value. With the blurring boundaries between private and professional life, these approaches become increasingly more important. We discuss the general implications of our findings with a view to possible new themes for the next years of research.