Acts of faith: instinct, value and IT investment decisions

Abstract

Although well over a thousand journal articles, conference papers, books, technical notes and theses, have been written on the subject of IT evaluation, only a relatively small subset of this literature has been concerned with core issues of what precisely is meant by the term 'value' and with the process of making (specifically) IT investment decisions. All too often, the problem and highly complex issue of value is either simplified, ignored or assumed away. Instead the focus of much of the research to date has been on evaluation methodologies and within this literature there are different strands of thought which can be classified as partisan, composite and meta approaches to evaluation. Research shows that a small number of partisan techniques are used by most decision makers with a minority using a single technique and a majority using a mixture of such techniques of whom a substantial minority use a formal composite approach. It is argued that in mapping the set of evaluation methodologies onto what is termed the investment opportunity space that there is a limit to what can be achieved by formal rational evaluation methods. This limit becomes evident when decision makers fall back on 'gut feel' and other non formal/rigorous ways of making decisions. It is suggested that understanding of these more complex processes and decision making, in IT as elsewhere, needs tools drawn from philosophy and psychology. Dan RemenyiDr Dan Remenyi has spent more than 25 years working in the field of corporate computers and information systems. He has worked with computers as an IS professional, business consultant and as a user. In all these capacities he has been primarily concerned with benefit realisation and obtaining the maximum value for money from the organisations information systems investment and effort. In recent years he has specialised in the area of the formulation and the implementation of strategic information systems and how to evaluate the performance of these and other systems. He has also worked extensively in the field of information systems project management specialising in the area of project risk identification and management. He has written a number of books and papers in the field of IT management and regularly conducts courses and seminar as well as working as a consultant in this area.

Revisiting IS business value research: what we already know, what we still need to know, and how we can get there

“…The importance of product and service innovations induced through IS is also highlighted in the literature (Aral & Weill, 2007;Zammuto et al, 2007). While resource protection and product and service provision are market-oriented capabilities that are assumed to have a direct impact on the strategic position of a firm, internal capabilities (sometimes referred to as 'intangibles') created through IS are deemed important parts of IS business value as well (Shin, 1997;Bannister & Remenyi, 2000;Brynjolfsson & Hitt, 2000;Devaraj & Kohli, 2000;Irani & Love, 2001;Irani, 2002;Oz, 2005). For example, implications of IS use at the individual level, and capabilities and knowledge at the organisational level (Kohli & Grover, 2008), such as redesigned business processes, better decision-making and improved coordination flexibility (Soh & Markus, 1995), may have either an intermediate, a delayed or a hidden impact on performance that is measured by traditional economic indicators.…”

“…The economic relevance of IS has been studied for many years and 12 years ago it had already attracted more than 1000 research papers (Bannister & Remenyi, 2000). In order to cover this abundance of literature systematically, to synthesise key research findings and to identify research problems, we conducted a comprehensive literature search: We performed a title search in pertinent journal databases and also scanned the table of contents of pertinent journals, including MIS Quarterly, Information Systems Research, Management Science, Journal of Management Information Systems, Organization Science, among others (see Appendix B for details on the search process).…”

“…The final body of literature considered in this study consists of more than 200 articles. Based on prior work (Schryen, 2010a, b), we also explored the following literature reviews on IS business value, which have been published since 1989 in peer-reviewed journals or peerreviewed conference proceedings: (Kauffman & Weill, 1989;DeLone & McLean, 1992;Brynjolfsson, 1993;Soh & Markus, 1995;Brynjolfsson & Yang, 1996;Sircar et al, 1998;Seddon et al, 1999;Bannister & Remenyi, 2000;Chan, 2000;Devaraj & Kohli, 2000;Dehning & Richardson, 2002;Irani & Love, 2002;Sylla & Wen, 2002;Dedrick et al, 2003;Melville et al, 2004;Piccoli & Ives, 2005;Chau et al, 2007;Wan et al, 2007;Kohli & Grover, 2008;Paré et al, 2008).…”

Design Science Evaluation for Enterprise Architecture Business Value Assessments

“…Thereby, ex ante evaluation is conducted before the decision to acquire or implement a new technology. Such decisions are further classified in [31]. A classification of various evaluation methods based on a limited literature review is presented in [29].…”

The Impact of Formal Decision Processes on e-Government Projects

“…However, research on risk and risk management in relation to e-Government is sparse [9]. In a study about IT investment decisions, Bannister and Remenyi (1999) mention that only a minority of decision makers use formal approaches and that managers often rely on their "gut feelings"; as a result, they recommend that future research should lean on psychology and philosophy to achieve a greater understanding of the managerial mind [10].…”