Key Issues in Delivering IT Business Value

Question: Discuss about the Key Issues in Delivering IT Business Value. Answer: Introduction In this age of Digitalization and globalization where operations are becoming increasingly difficult to manage, IT systems have become very important for all the enterprises. IT, which was once seen as just an enabler by the enterprises, has now also become a key differentiator in terms of the benefits and advantages. Efficient IT systems and technology also gives the competitive advantage to enterprises. For example, organizations having IT systems that forecasts demand with minor error will have a huge advantage over competitors who does not have the efficient systems to forecast. However, there are also numerous cases in the past where IT implementations have proven disastrous for organizations. There is very popular case FoxMeyer drug (Scott, Vessey, 2015) wholesaler that becomes bankrupt from the failed implementation. What makes this implementation failed and why IT failed to deliver value in this case gives rise to some very important questions about the nature of IT projects . The mystery here is that having the best technology and hiring a best consulting partner does not guarantee success. Many more things are required. Researchers have classified this failure as failure of management in aligning the IT with business strategies and goals and have huge expectations from IT implementations. Some scholars said that due to lack of skilled manpower and process owner in FoxMeyer lead to failure that can define the processes with the consultants and test the results (Chung, Ahmad, Tang, 2015). Apart from this, there are many more failures in IT projects like Hershey implementation, Nike implementing new IT systems. It would be correct to say that Information Technology has emerged as a key organizational function. However, it is not easy to implement the IT for organizations. The large organizations can still invest towards IT and make its implementation successful. However, the mid size organizations and the small size organizations would find it difficult to implement the IT. It is believed that the small and mid size organizations may have various internal and external issues while implementing or delivering the IT value. This risks or issue could be social or cultural in nature. Therefore, it is recommended that the organizations must have a clear understanding of all the internal and external factors before making any IT investment. Academicians, researchers and scholars have developed several models whereby the issues are discussed in detailed with respect to enterprises case studies and appropriate approaches are suggested. However, there is no direct formula for getting value by implementing IT. Management of each company needs to evaluate their own systems and define appropriate IT strategy that can be comprised of various models or customized to get the value. At the same time, organizations first have to understand their definition of value. Earlier, there was lack of guidance on value measurement models however currently with the evolution of IT, there are models that are developed with the help of corporate people and that is why they are fully practical with lot of insights at ground level. Discussion on such issues pertaining to delivering IT value along with various models will be the course of action of this literature review. Main concepts and model evolution There is no dearth of research on this topic with the growing evolution of IT in every aspect of life today. However, one of the pioneer Weill (1992) introduced the concept of IT conversion effectiveness to explain the issues involved in failure of some major IT projects. Weills definition of effectiveness is attributed to 4 factors top management commitment to IT, Enterprises past experience with IT, User satisfaction and political turbulence. This model does not talk about financial indicators(Rai, Arun, Patnyayakuni, 1996)). After that, there are many models developed in this area to refine and get maximum value out of IT implementations projects although there are many similarities. Lucas (1993) developed a hybrid model, which is mix of process and variance model. According to this model, 2 conditions if occurs in sequence lead to effective outcome. The first one is necessary but not sufficient that IT should be aligned with the firms task. The second condition effective IT design is not sufficient for performance outcome unless it is used. If monitored closely, Lucas stressed on one of the factor of Weill (1992) which is user satisfaction. This is important aspect and many models include it. User understanding of the system, effective training and their satisfaction is one of most important factors for success of IT projects where it is difficult to overcome resistance of change and bring them out of their comfort zone of doing things traditionally. Lucas also added other variables in his model. One of the shortcomings of Lucas model was it talks about alignment of IT with organizations task but does not talk about cost structure. Suppose Oracle ERP is very much aligned to much particular business but the decision to use Oracle should take cost of the software, implementation cost and volume of the business. Grabowski and Lee (1993) consider alignment and balance between organizations strategy, cost structure and IT portfolio. For example, if processes of organization are niche and not standard, they should consider IT systems that are customizable and that support customizations at low cost unlike SAP ERP systems where customizations are not recommended more than 15%. Building on the previous models, Markus and SOH (1993) developed another influential process model that captures the actions of CIOs of different industries implementing IT. This model basically studies how the organizations evaluates the value derived from IT and suggests some more details into the entire journey of getting value from implementing IT systems. They break the IT journey of enterprise into 3 phases: The first phase talks about IT expenditure may or may not become IT assets depending on the IT management. Here the stress is on quality of management. Phase 2 comprised of these IT assets may or may not create the desired IT impact depending on how appropriately they are use. This phase may include user satisfaction and acceptance of IT systems. Phase 3 talks about this impact may or may not lead to organizational performance depending on competition, market dynamics. This model was powerful in a sense that it is very detailed and it was moved away from the earlier models by stressing on that there cannot be necessary and sufficient conditions between IT expenditure and organization performance due to many other factors at every stage of the journey. Beath, Goodhue and Ross (1994) developed model on top of Markus and SOH stating that IT asset consists of human resources, technology and relationships between IT and users. They stated that IT delivers value by impacting 3 critical processes, which are system development, business planning and business operations. They stress on importance of high quality assets as necessary condition for creating value. There is also loop in this model that improvement in any of the 3 business processes would require in quality of IT assets. Sambamurthy and Zmud (1994) uses the term IT impact in place of IT assets in Markus and SOH model or business value in Beath, Goodhue and Ross model. This model argued that raw materials (Knowledge, data, technology) and resource competencies (knowledge of business process owners, knowledge of consultants, experience of consultants with technology) creates IT impacts. Its a variable model in the sense that it stated that higher the competencies, greater will be the IT impact which will create business value. This model does not talk about how increase in IT impact will increase business value. Martinsons (1999) develops model which is customized Balanced scorecard for IS systems. It measures the IS activities based on 4 aspects i.e. user orientation, business value, internal process and future readiness. This model was highly accepted and influential. It is may be because this was customized version of Balanced score card model which is already accepted by the industry. However, there was no discussion on use of this models and details missing for each metrics. This also needs support from stakeholders and implementing it is a big task. There is still research needed in this area as not many models were favorable for implementation from the CIOs point of view. Some models lack financial details, some lack theory though they also seem to converge on some important points and provided valuable insights but following any one of them can be a challenge. Mitra et al (2011) develop model after interviewing CIOs of 23 companies that consists of exhaustive portfolio of IT metrics organized in 9 cells. This model is most practical and powerful till data as this addresses one of the most important concerns of the CIOs that IT metrics should play important role in driving IT conservations. Organization can select subset of cells for implementation. The beauty of this model is that it is very comprehensive that focuses on customer satisfaction, innovations, reliability, cost, compliance and so on. There are various case studies also that demonstrate the practical use of this model and how this model can be implemented in parts. Apart from this, there are many researches that help to identify the key issue in delivering IT business value. Change resistance is one of the big deciding factors in any project. Key users are in their comfort zone and thus resist the new technology, change or new way of doings things. They will make excuses making it difficult of implementers and if change is not managed efficiently by higher management, this resistance will ultimately lead to collapse of the value (Ram, Crokindale, Wu, 2013). Training is also another important factor. Sometimes, due to lack of training, users prefer to do things traditionally. They use worksheets instead of state of art software which defeat the whole purpose of IS. Selection of improper software without considering the requirement initially may lead to collapse. Some software are customizable while some are not. It is very important that appropriate software is selected and experienced consulting company should be engaged (Muller, Jugdev, 2012). Inability to control and define the scope of the project may lead to financial losses and also effect timeline. Conclusion With the advent of IT capturing every aspect of life and latest technology of Digitalization, connected homes, internet of things, there is no doubt that IT will only going to increase in coming days. However, there are always challenges in delivering and measuring IT business value. There are various models developed over a period of time on the same. While many of them have limitations, some are proven very beneficial also for enterprises and documented as case studies. No particular model can be beneficial for all. It is not one size fits all, it is one of its kind and can be developed specific to particular enterprise based on the nature of IT project. CIOs can employ a mix of models, which suits them, or follow a particular model to improve the key metrics associated with IT projects. Many models also converge on importance of having competencies, user interaction, and quality higher management and so on. Each organization should prepare their own IT strategy aligned with their vision and mission statements Also, financial or non financial metrics, both are not complete if considered alone. This is the mistake some models did and the evolution of Value measurement models tells that key performance metrics should be comprehensive comprising of both financial as well as non-financials. Also, there are many common issues and risks that may not be a part of metrics model but prevents IT business value reaching its full potential like change resistance, improper requirements, lack of documentation, lack of knowledge that must be focused on so as to get the true IT business value. Bibliography Beath, C., Goodhue, D., Ross, J. (1994). Partnering for business value: The shared management of the IS infrastructure.ICIS 1994 Proceedings, 40. Chung, S. H., Ahmad, S. I., Tang, H. L. (2015). Symptoms, causes and remedies for failures in enterprise systems implementation.International Journal of Business Information Systems,19(1), 103-118. Lucas, H. C., Jr. (2005). Information technology: strategic decision making for managers. Hoboken: John Wiley Sons Inc Martinsons, M; Davison, R and Tse, D. (1999). The Balanced Scorecard: A Foundation for the Strategic Management of Information Systems. Decision Support Systems 25(2) 71-88 Mitra, S; Sambamurthy, V and Westerman, G. (2011) Measuring IT Performance and Communicating Value MIS Quarterly Executive, 10(1) 47 59 Mller, R., Jugdev, K. (2012). Critical success factors in projects: Pinto, Slevin, and Prescott-The elucidation of project success.International Journal of Managing Projects in Business,5(4), 757-775. Rai, A., Patnayakuni, R., Patnayakuni, N. (1996). Refocusing where and how IT value is realized: An empirical investigation.Omega,24(4), 399-412. Ram, J., Corkindale, D., Wu, M. L. (2013). Implementation critical success factors (CSFs) for ERP: Do they contribute to implementation success and post-implementation performance?.International Journal of Production Economics,144(1), 157-174. Sambamurthy, V., Zmud, R. W. (1992).Managing IT for success: The empowering business partnership. Financial Executives Research Foundation. Scott, J. E., Vessey, I. (2015). The magazine archive includes every article published in Communications of the ACM for over the past 50 years.Communications of the ACM,45(4), 74-81. Soh, C., Markus, M. L. (1995). How IT creates business value: a process theory synthesis.ICIS 1995 Proceedings, 4. Weill, P. (1992). The relationship between investment in information technology and firm performance: A study of the valve manufacturing sector.Information systems research,3(4), 307-333.