Business Value of Information Technology - A Data Analytics Approach

Abstract

The primary objective of these notes is to suggest a series of topics for teaching the introduction to information systems to an accounting and finance audience. It is intended to provide a foundation for understanding how firms leverage IT enabled strategies to achieve and sustain competitive advantage and superior financial performance.

Given the fact that worldwide companies and organizations spend trillions of dollars on IT, our focus will be on the following three topics/questions:

1) Strategic IT Analytics: Why firms invest in IT, i.e., what are the expected benefits, costs, and risks from investment in emerging or mature technologies.

2) Operational IT Analytics: What are some of the IT investments that firms undertake and what are some of the operational gains. For example, databases are the foundation of enterprise systems, and enterprise systems enable firms to compete with data analytics.

3) Tactical IT Analytics: How do companies justify, monitor, and control IT spending (e.g., IT budgets), and how they evaluate the expected payoffs from these investments (e.g., capital budgeting analysis, real options).

The approach that we use to address these topics/questions is based on business analytics. This means that, when possible, we will justify our answers/decision based on data supported evidence.

Keywords: IT business value, IT strategy, data analytics, databases, ERP, IT budgets, IT governance, capital budgeting analysis

JEL Classification: M15, L1, L21, L25, M41