• Selected
• Entire List

Abstract:
The Internet is a powerful channel that presents new opportunities for touching customers, enriching products and services with information, squeezing out costs through process automation, and redesigning internal business processes through enhanced communication and knowledge sharing. In most firms e-business processes are changing the nature of the buyerseller relationship, the role of information technology (IT), and the design of organizational structures and roles. As firms attempt to capitalize on their existing capabilities through the Internet, they necessarily disrupt their embedded processes. This process of leveraging strengths and disrupting habits underlies the migration to e-business?a migration from market place to market space. This report describes that migration using cross-case analysis of nine firms' ebusiness efforts.

Abstract:
This paper defines four basic business models based on what asset rights are sold (Creators, Distributors, Landlords and Brokers) and four variations of each based on what type of assets are involved (Financial, Physical, Intangible, and Human). Using this framework, we classified the business models of all 10,970 publicly traded firms in the US economy from 1998 through 2002. Some of these classifications were done manually, based on the firms' descriptions of sources of revenue in their financial reports; the rest were done automatically by a rule-based system using the same data. Based on this analysis, we first document important stylized facts about the distribution of business models in the U.S. economy. Then we analyze the firms' financial performance in three categories: market value, profitability, and operating efficiency. We find that no model outperforms others on all dimensions. Surprisingly, however, we find that some models do, indeed, have better financial performance than others. For instance, Physical Creators (which we call Manufacturers) and Physical Landlords have greater cash flow on assets, and Intellectual Landlords have poorer q's, than Physical Distributors (Wholesaler/Retailers). These findings are robust to a large number of robustness checks and alternative interpretations. We conclude with some hypotheses to explain our findings.

business models, performance

Abstract:
As firms strive to generate value from information technology (IT), managers are increasingly aware that IT-related decisions and behaviors must be aligned with organizational performance goals. But many individuals throughout organizations make daily decisions influencing the value received from IT. IT governance is the process by which firms align IT actions with their performance goals and assign accountability for those actions and their outcomes. To be effective, IT governance must be actively designed, not the result of isolated mechanisms (e.g. steering committee, office of IT architecture, service level agreements) implemented at different times to address the challenge of the moment. Based on the best practices of 300 enterprises in 23 countries this paper offers an assessment and a one-page framework to help firms design and communicate IT governance.

IT governance, governance framework

Abstract:
Investing in IT infrastructure is one of the most challenging tasks facing senior managers who often feel ill equipped to make these decisions. Investing in the right infrastructure at the right time enables rapid implementation of future electronically based business initiatives and cost reduction of current business processes. This paper presents a framework for senior executives to view IT infrastructure in business terms and to lead in making investment decisions. By studying 180 electronically based business initiatives in 89 top performing enterprises we identified the specific infrastructure capabilities needed for different types of business initiatives and how this capability is provided as an integrated IT infrastructure. An integrated IT infrastructure has ten clusters of IT infrastructure services fine tuned to the enterprise's set of electronically based business initiatives. Using the frameworks for describing IT based business initiatives, executives can identify the future family of initiatives (i.e., their desired strategic agility) the enterprise desires to lead their industry with. This is a process of strategic choice and balancing investing in longer-term agility with shorter-term cost minimization. Successful enterprises get this infrastructure balance right more often than not because they make regular, systematic modular and targeted investments while having a clear picture of their own overall infrastructure capability and how each incremental investment adds value. To lead on multiple dimensions in strategic agility required an integrated infrastructure with high capabilities in all infrastructure clusters and a deliberate approach to data management to manage conflicts. The paper concludes with a set of suggested steps to link an enterprise's desired strategic agility with the above average infrastructure capability needed.

IT, Infrastructure, IT Infrastructure, Strategy, Agility, Strategic Agility

Abstract:
Firms achieving above industry average returns from IT investments must be making consistently better IT-related decisions. Effective IT governance is one of the ways these
firms achieve superior returns. Many firms are creating IT governance structures that encourage the behavior leading to achieving the firm's business performance goals. We define IT governance as specifying the decision rights and accountability framework to encourage desirable behavior in the use of IT. Effective IT governance requires careful analysis about who makes decisions and how decisions are made in at least four critical domains of IT: principles, infrastructure, architecture, and investment and prioritization. We studied the use of IT in large multi-business unit firms in the USA and Europe and found that the typical firm governs IT by following generally accepted guidelines with broad-based inputs and tightly controlled decision rights. However, top-performing firms governed IT differently with governance structures linked to the performance measure on which they excelled (e.g., growth). Designing an effective IT governance structure requires understanding the competing forces in a large organization and creating harmony among business objectives, governance archetype and business performance goals. An effective IT governance structure is the single most important predictor of getting value from IT. To help understand and design more effective governance, we propose an IT governance framework that specifies how decisions are made in the key IT domains. The framework harmonizes desired governance archetypes (i.e., monarchy, feudal, federal and anarchy) and a series of governance mechanisms (e.g., committees, approval processes and organizational forms). The framework is illustrated with effective IT governance at State Street Corporation. Effective IT governance encourages and leverages the ingenuity of all the firm's people in using IT, not just the leaders, while still ensuring compliance with the firm's overall vision and principles. In short, don't just lead, govern!

IT, Governance, IT Governance

Abstract:
Information technology is major investment for most enterprises and constitutes a portfolio of investments. Just like any other investment portfolio, the IT portfolio must be balanced to achieve alignment with business strategy and the desired combination of short and long term pay off. This portfolio balancing is the role of senior management and should be integrated into firms' IT governance processes. Top financial performers have matched particular organizational practices and competencies with IT portfolio allocations to achieve specific business goals. In short, they have more IT savvy and it pays off.

Retail, business model, IT and information management, IT enabled strategy, outsourcing

Abstract:
State Street, a world leader in financial services, has more than 20 entrepreneurial business units which continually identify customer needs and create new products and services, usually heavily IT dependent, often leading their industry in time to market. To enable these businesses, State Street invests between 20 and 25% of total operating expenses in technology and technologists. To maximize the business value from these IT investments requires the creation of an IT governance framework that harmonizes all IT governance mechanisms (e.g., committees, IT organization structure, approval processes) to maximize return from the IT investment. This case explores how State Street redesigned its IT governance to enable a major change in the firm's strategy.

IT Governance, IT Architecture

Abstract:
Despite evidence of a positive relationship between IT investments and firm performance, results still vary across firms and performance measures. We explore two organizational explanations for this variation: differences in firms' IT investment allocations and IT capabilities. We develop a theoretical model of IT resources, defined as the combination of specific IT assets and organizational IT capabilities. We argue that investments into different IT assets are guided by firms' strategies (e.g. cost leadership or innovation), and deliver value along performance dimensions consistent with their strategic purpose. We hypothesize that firms derive additional value per IT dollar through a mutually reinforcing system of organizational IT capabilities built on complementary practices and competencies. Empirically, we test the impact of IT assets, IT capabilities and their combination on four dimensions of firm performance: market valuation, profitability, cost and innovation. Our results, based on data on IT investment allocations and IT capabilities in 147 U.S. firms from 1999-2002, demonstrate that IT investment allocations and organizational IT capabilities drive differences in firm performance. Firms' total IT investment is not associated with performance, but investments in specific IT assets explain performance differences along dimensions consistent with their strategic purpose. In addition, a system of organizational IT capabilities strengthens the performance effects of IT assets and broadens their impact beyond their intended purpose. The results help explain variance in returns to IT capital across firms and expand our understanding of alignment between IT and organizations. We illustrate our findings with examples from a case study of 7-Eleven Japan.

Business Value of Information Technology, Information Technology Assets, Resource Based Theory, Complementarities, IT Infrastructure, IT Capabilities, IT Practices, Firm Performance

Abstract:
This case describes the challenges of implementation of IT Governance in a regional New England bank experiencing explosive and very profitable growth through mergers and acquisitions. Led by the CIO the new IT governance framework and implementation go wells beyond the IT department: business processes, culture and strategies are involved. Six months after implementation the CIO assess the effectiveness of the new IT governance framework and thinks about fine tuning.

IT governance, governance framework

Abstract:
Manheim Interactive is a subsidiary of Manheim Auctions, a 55-year old brickand-mortar firm that is the number one player in offline vehicle remarketing. Since 1996, Manheim has been remarketing used automobiles over the Internet. Manheim Interactive has found that the strength of the Manheim Auctions brand and the confidence and trust that independent car dealers have in Manheim Auctions has been pivotal in increasing the number of cars sold online from 62 to in 1996 to 100,000 cars with a value of $1.5 billion in 2000. The case study describes the online services offered, the approach to managing the online bus iness, the relationship with the physical auctions business, the IT Infrastructure & applications that deliver the online services, and the metrics used to measure the success of Manheim Interactive.

Abstract:
Managing the IT Portfolio (Update Circa 2003) (with Sinan Aral), Vol. III, No. 1C, March 2003. Introduces the MIT CISR IT Portfolio framework with four IT asset classes and provides benchmarks for 2001 and 1993-97. "Managing the IT Portfolio: Returns from the Different IT Asset Classes" (with Sinan Aral), Vol. IV, No. 1A, March 2004. Provides firm performance returns for investments in each of the four IT asset classes. "IT Savvy Pays Off" (with Sinan Aral), Vol. IV, No. 3B, October 2004. Demonstrated the extra returns to the bottom line from IT investment in firms with high IT Savvy (a set of interlocking IT practices and competencies). "IT Savvy: Achieving Industry Leading Returns from Your IT Portfolio" (with Sinan Aral), Vol V, No. 2A, July 2005. Case studies on companies with high and low IT Savvy plus suggestions for maximizing the business value of IT investments. "Managing the IT Portfolio (Update Circa 2005): Where Did the Infrastructure Go?" (with Anne Johnson), Vol V. No. 3A, December 2005. IT Portfolio benchmarks for 2005 and 2001 - demonstrating a significant drop in IT infrastructure. "How IT Savvy is Your Enterprise? Self Assessment and Benchmarking" (with Sinan Aral), Vol. VI, No. 1A, March 2006. A self assessment for IT Savvy with benchmarks.

Abstract:
The purpose of this paper is to define and critique the use of contingency theory in the field ofManagement Information Systems (MIS). The existence of such a theory is demonstrated through adetailed review of the MIS literature. The development of contingency theory in MIS is compared tothe development of Organization Theory. The developments in the two fields have been remarkablysimilar and the field of MIS can benefit from the experiences of organization theorists. We arguethat since MIS is at an early stage of development, it is now repeating some of the unproductiveassumptions and lines of development of contingency theory.The conclusion from this analysis is that the contingency theory implicit in MIS research isinadequate. Progress in the field has been hampered by the adoption of a naive meta-theory and anarrow research perspective. This has resulted in highly mixed empirical results, a prematurequantification strategy, and ill-defined concepts of performance and fit.A series of recommendations for improving the theoretical basis of MIS are given. Theserecommendations include relaxing the assumptions that constitute the naive meta-theory of acontingency theory in MIS. A more subjectivist, less functional, less unreflexive and lessdeterministic approach is advocated. In addition, changes in research methodologies are recommended.An increased emphasis on training in case study methodologies, longitudinal research andethnographic approaches is suggested.

Abstract:
A collection of research briefings from MIT Center for Information Systems Research in 2004.

Abstract:
Information technology (IT) is essential to many businesses, but there are few guidelines for determiningthe adequate level of investment in IT. The purpose of this paper is to further understanding of themechanism of IT investment. Previous studies on IT investment are briefly presented. The authorsperformed six-mini case studies of large companies in five different industries; these studies addressed thequestions of how firms define IT and how they manage their investment in IT. Our goal was to formulatea model of the relationship between IT investment and organizational performance. We present themodel and pose questions for investigating this important relationship more closely.Findings of interest relate to the definition of IT, the importance of political considerations, the conceptof an industry-based threshold investment, the conversion effectiveness of IT investment, and the conceptof productive capacity. The most important finding relates to the separation of different types of ITinvestment and their logical matching to particular performance measures.

Information technology investment, organizational performance, conversion effectiveness, strategy

Abstract:
During the period of 2000 to 2006 MIT CISR has conducted several research projects on IT Portfolios, IT Savvy and firm performance. Just as investors have portfolios of financial investments to address their multiple investment objectives, firms have portfolios of information technology (IT) investments. Four different management objectives guide firms' investments in IT resulting in four different asset classes. Each of these asset classes has a different objective and a unique risk-return profile. Just like any other investment portfolio, the IT Portfolio must be balanced to achieve alignment with the business strategy and the desired combination of short- and long-term pay off. This compilation describes the MIT CISR approach to the management of IT investment as a portfolio and presents benchmarks of IT Portfolios from over 600 firms as well as the average financial returns from each IT asset class. Firms with high IT Savvy have a set of six reinforcing IT practices and competencies that help achieve a higher measurable bottom line return per IT dollar invested.

IT Portfolio, IT investment, firm performance, IT Savvy, IT premium, complementarities

Abstract:
Firms today invest enormous resources in information technology with the hope of gaining significant returnswhich will impact their performance. A growing body of research into the firm performance effects of IT investmenthas emerged and is sometimes referred to as IT business value research. The problem researchers face is identifyingrobust methods to gain insight into how IT business value is created. This paper reports on the state of IT businessvalue research by reviewing thirteen empirical studies. It also proposes a new evaluative framework to identifystrengths and weaknesses in this research. The paper concludes with a series of recommendations to improve thequality of future IT business value research.

Abstract:
IT creates impacts at several levels in the firm and often indirectly contributes to firm profitability. The problem ISresearchers face is identifying robust methods that give reliable results. This paper reports on state-of-the-artmethods in IT value research, reviews eleven major empirical studies and suggests three fundamental classes ofconsiderations for conducting successful IT value research. To illustrate methodological advance, new results arepresented from two recently completed IT value studies in financial services and manufacturing. The paper concludesby suggesting untapped theory bases that have the most to offer IT value research.

Abstract:
Information Systems Working Papers Series

Abstract:
This study investigates the relationship between system success asoperationalized by user information satisfaction (UIS) and variouseconomic measures of firm performance. The findings indicate asignificant positive but complex relationship between firmperformance and UIS. In particular, we found that it isinappropriate to aggregate UIS scores across individuals within afirm. The CEO, Controller, and Production Manager within a firmtended to have quite different UIS scores, resulting in low interraterreliabilities. We also found, that the association betweena respondent's UIS score and the measures of firm performancedepended heavily on the position of the respondent and theparticular performance measure employed.

Abstract:
Although IT portfolio management has been a best practice for some time, many companies are still getting returns from IT investments that are below their potential. New studies show that a measureable premium can be gained by implementing a set of interlocking business practices and processes, collectively called IT savvy.

IT Business Value, IT Portfolio Management, Intangible Investments, Organizational Complements to IT