Beyond the Business Case: Strategic it Investment

17 Pages Posted: 13 Jun 2002

See all articles by Jeanne W. Ross

Jeanne W. Ross

Massachusetts Institute of Technology (MIT) - Center for Information Systems Research (CISR)

Cynthia Beath

University of Texas at Austin - Department of Information, Risk and Operations Management

Date Written: October 2001

Abstract

Traditionally, most firms' IT capital investment decisions have been based on business cases estimating financial returns on individual applications. Infrastructure costs were often bundled with applications, although disruptive technologies, such as desktop computing and Internet protocols, led to occasional large lump sum investments. In this paper, we argue that firms should make four distinct types of IT investments: transformation, renewal, process improvements, and experiments. Transformation initiatives create significant, long-term infrastructure that enables major changes in organizational processes. Renewal initiatives improve the efficiency or effectiveness of existing shared IT platforms. Business process improvement initiatives increase the net value of business activities, products or services by leveraging, not building, shared infrastructure. Experiments are business applications focused on identifying and developing opportunities afforded by IT. We describe these four types of initiatives and illustrate them using evidence from field research and case studies. We conclude that firms should be investing in all four types of initiatives in order to address both short-term profitability and longer-term survival and growth and to develop the robust IT environment and business applications that are needed to support their desired business model.

Suggested Citation

Ross, Jeanne W. and Beath, Cynthia, Beyond the Business Case: Strategic it Investment (October 2001). Available at SSRN: https://ssrn.com/abstract=305712

Jeanne W. Ross (Contact Author)

Massachusetts Institute of Technology (MIT) - Center for Information Systems Research (CISR) ( email )

Sloan School of Management
5 Cambridge Center, NE25-777
Cambridge, MA 02142
United States
617-253-9461 (Phone)
617-253-4424 (Fax)

HOME PAGE: http://cisr.mit.edu

Cynthia Beath

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
2,572
Abstract Views
8,824
rank
5,343
PlumX Metrics