Advertisement

Journal of Information Technology

, Volume 29, Issue 2, pp 114–127 | Cite as

Management commitments that maximize business impact from IT

  • Anne Quaadgras
  • Peter Weill
  • Jeanne W Ross
Research Article

Abstract

As digitization becomes pervasive, many organizations struggle to drive value from the growing number of IT-related opportunities. We show how the drivers of IT value creation can be framed as firm-wide commitments to a set of IT capabilities. On the basis of 20 published case studies, we identify a small set of IT decisions that organizations must make to use IT to successfully enhance their impact. We group these decisions into a framework of four commitments. Making these commitments helps organizations reinforce what really matters over time, which in turn helps focus the attention of their employees. We demonstrate, via a survey of 210 publicly traded firms, that firms which are more effective in making these four commitments have higher business impact from IT, which in turn correlates with higher financial performance. We suggest the construct of commitment is a step toward unifying the IT value literature and creating an overarching concept that brings together many of the important management practices identified in previous work.

Keywords

business value of IT information systems and organizational change case studies survey firm performance commitment 

Notes

Acknowledgements

An earlier version of this paper was presented at ICIS 2011: Quaadgras, A.L., P. Weill, and J.W. Ross (2011). Management Commitments that Maximize Business Impact from IT. International Conference on Information Systems. Shanghai, China.

References

  1. Aral, S. and Weill, P. (2007). IT Assets, Organizational Capabilities, and Firm Performance: How resource allocations and organizational differences explain performance variation, Organization Science 18 (5): 763–780.CrossRefGoogle Scholar
  2. Barua, A., Konana, P., Whinston, A.B. and Fang, Y. (2004). An Empirical Investigation of Net-Enabled Business Value, MIS Quarterly 28 (4): 585–620.Google Scholar
  3. Beath, C.M. and Ross, J.W. (2006). JM Family Enterprises, Inc.: Selectively outsourcing IT for increased business value. MIT CISR Working Paper WP 358, Cambridge, MA: MIT Press, pp. 1–13.Google Scholar
  4. Beath, C.M. and Ross, J.W. (2007a). Chevron: Outsourcing commodity processes in a commodity business. MIT CISR Working Paper WP 371, Cambridge, MA: MIT Press, pp. 1–19.Google Scholar
  5. Beath, C.M. and Ross, J.W. (2007b). Information and Transformation at Swiss Re: Maximizing economic value. MIT CISR Working Paper WP 373, Cambridge, MA: MIT Press, pp. 1–14.Google Scholar
  6. Beath, C.M. and Ross, J.W. (2010). Pepsiamericas: Building an information savvy company. MIT CISR Working Paper WP 378, Cambridge, MA: MIT Press, pp. 1–17.Google Scholar
  7. Bernroider, E.W.N. (2008). IT Governance for Enterprise Resource Planning Supported by the Delone-Mclean Model of Information Systems Success, Information & Management 45 (5): 257–269.CrossRefGoogle Scholar
  8. Bharadwaj, A.S. (2000). A Resource-Based Perspective on Information Technology Capability and Firm Performance: An empirical investigation, MIS Quarterly 24 (1): 169–196.CrossRefGoogle Scholar
  9. Bharadwaj, S., Bharadwaj, A. and Bendoly, E. (2007). The Performance Effects of Complementarities between Information Systems, Marketing, Manufacturing, and Supply Chain Processes, Information Systems Research 18 (4): 437–453.CrossRefGoogle Scholar
  10. Bhatt, G.D. and Grover, V. (2005). Types of Information Technology Capabilities and their Role in Competitive Advantage: An empirical study, Journal of Management Information Systems 22 (2): 253–277.Google Scholar
  11. Brynjolfsson, E., Hitt, L.M. and Yang, S. (2002). Intangible Assets: Computers and organizational capital, Brookings Papers on Economic Activity 23 (1): 137–198.CrossRefGoogle Scholar
  12. Capelo, C. and Dias, J.F. (2009). A System Dynamics-Based Simulation Experiment for Testing Mental Model and Performance Effects of Using the Balanced Scorecard, System Dynamics Review 25 (1): 1–34.CrossRefGoogle Scholar
  13. Chan, Y.E., Huff, S.L., Barclay, D.W. and Copeland, D.G. (1997). Business Strategic Orientation, Information Systems Strategic Orientation, and Strategic Alignment, Information Systems Research 8 (2): 125.CrossRefGoogle Scholar
  14. Chang, J.C.-J. and King, W.R. (2005). Measuring the Performance of Information Systems: A functional scorecard, Journal of Management Information Systems 22 (1): 85–115.Google Scholar
  15. Chen, D.Q., Mocker, M., Preston, D.S. and Teubner, A. (2010). Information Systems Strategy: Reconceptualization, measurement, and implications, MIS Quarterly 34 (2): 233–A238.Google Scholar
  16. Chung, R. and Marchand, D. et al. (2005). The Cemex Way: The right balance between local business flexibility and global standardization, IMD Case 3–1341.Google Scholar
  17. Chung, R. and Paddack, K. et al. (2003). Cemex: Global growth through superior information capabilities, IMD Case 3–0953.Google Scholar
  18. Davenport, T.H., Harris, J.G. and Morison, R. (2010). Analytics at Work: Smarter decisions, better results, Boston, MA: Harvard Business School Press.Google Scholar
  19. DeLone, W.H. and McLean, E.R. (1992). Information Systems Success: The quest for the dependent variable, Information Systems Research 3 (1): 60–95.CrossRefGoogle Scholar
  20. Devaraj, S. and Kohli, R. (2003). Performance Impacts of Information Technology: Is actual usage the missing link? Management Science 49 (3): 273–289.CrossRefGoogle Scholar
  21. Eckerson, W. (2009). Who Ensures Clean, Consistent Data? (Hint: It’s not just the IT department!), TDWI Monograph Series 15 (9): 1–10.Google Scholar
  22. Feeny, D.F. and Willcocks, L.P. (1998). Core is Capabilities for Exploiting Information Technology, Sloan Management Review 39 (3): 9–21.Google Scholar
  23. Fink, L. and Neumann, S. (2009). Exploring the Perceived Business Value of the Flexibility Enabled by Information Technology Infrastructure, Information & Management 46 (2): 90–99.CrossRefGoogle Scholar
  24. Fornell, C. and Larcker, D.F. (1981). Evaluating Structural Equation Models with Unobservable Variables and Measurement Error, Journal of Marketing Research 18 (1): 39–39.CrossRefGoogle Scholar
  25. Ghemawat, P. (1991). Commitment: The Dynamic of Strategy, New York: Free Press.Google Scholar
  26. Ghemawat, P. (1993). Commitment to a Process Innovation: Nucor, USX and thin-slab casting, Journal of Economics and Management Strategy 2 (1): 135–161.CrossRefGoogle Scholar
  27. Gibson, C. (2006a). Allstate Insurance Company: Building the capability for IT-enabled change. MIT CISR Working Paper WP 361, Cambridge, MA: MIT Press, pp. 1–6.Google Scholar
  28. Gibson, C. (2006b). Turnaround at Aetna: The IT factor. MIT CISR Working Paper WP 362, Cambridge, MA: MIT Press, pp. 1–6.Google Scholar
  29. Gonzalez-Padron, T.L., Chabowski, B.R., Hult, G.T.M. and Ketchen, D.J. (2010). Knowledge Management and Balanced Scorecard Outcomes: Exploring the importance of interpretation, learning and internationality, British Journal of Management 21 (4): 967–982.CrossRefGoogle Scholar
  30. Grover, V. and Saeed, K.A. (2007). The Impact of Product, Market, and Relationship Characteristics on Interorganizational System Integration in Manufacturer – Supplier dyads, Journal of Management Information Systems 23 (4): 185–216.CrossRefGoogle Scholar
  31. Hair, J., Black, W., Babin, B. and Anderson, R. (2010). Multivariate Data Analysis, 7th edn, Upper Saddle River, NJ: Prentice-Hall.Google Scholar
  32. Harman, H.H. (1976). Modern Factor Analysis, Chicago: University of Chicago Press.Google Scholar
  33. Hitt, L.M. and Brynjolfsson, E. (1996). Productivity, Business Profitability, and Consumer Surplus: Three different measures of information technology value, MIS Quarterly 20 (2): 121–142.CrossRefGoogle Scholar
  34. Hoffman, R.R. (ed.) (2007). Expertise out of Context, Mahwah, NJ: Lawrence Erlbaum Associates.Google Scholar
  35. Hu, L.T. and Bentler, P.M. (1999). Cutoff Criteria for Fit Indexes in Covariance Structure Analysis: Conventional criteria versus new alternatives, Structural Equation Modeling: A Multidisciplinary Journal 6 (1): 1–55.CrossRefGoogle Scholar
  36. Hulland, J., Wade, M.R. and Antia, K.D. (2007). The Impact of Capabilities and Prior Investments on Online Channel Commitment and Performance, Journal of Management Information Systems 23 (4): 109–142.CrossRefGoogle Scholar
  37. Johnston, H.R. and Vitale, M.A. (1988). Creating Competitive Advantage with Interorganizational Information Systems, MIS Quarterly 12 (2): 153–165.CrossRefGoogle Scholar
  38. Kaplan, R.S. and Norton, D.P. (1992). The Balanced Scorecard – Measures that drive performance, Harvard Business Review 70 (1): 71–79.Google Scholar
  39. Kaplan, R.S. and Norton, D.P. (1996a). The Balanced Scorecard: Translating strategy into action, Boston, MA: Harvard Business School Press.Google Scholar
  40. Kaplan, R.S. and Norton, D.P. (1996b). Linking the Balanced Scorecard to Strategy, California Management Review 39 (1): 53–79.CrossRefGoogle Scholar
  41. Koh, C., Ang, S. and Straub, D.W. (2004). IT Outsourcing Success: A psychological contract perspective, Information Systems Research 15 (4): 356–373.CrossRefGoogle Scholar
  42. Kohli, R. and Grover, V. (2008). Business Value of IT: An essay on expanding research directions to keep up with the times, Journal of the Association for Information Systems 9 (1): 23.Google Scholar
  43. Lacity, M.C. and Willcocks, L.P. (1998). An Empirical Investigation of Information Technology Sourcing Practices: Lessons from experience, MIS Quarterly 22 (3): 363–408.CrossRefGoogle Scholar
  44. Liang, T.-P., You, J.-J. and Liu, C.-C. (2010). A Resource-Based Perspective on Information Technology and Firm Performance: A meta analysis, Industrial Management & Data Systems 110 (8): 1138–1158.CrossRefGoogle Scholar
  45. Luftman, J.N. (2003). Competing in the Information Age: Align in the sand, New York: Oxford University Press.CrossRefGoogle Scholar
  46. Malone, T.W., Weill, P., Lai, R.K., D’Urso, V.T., Herman, G., Apel, T.G. and Woerner, S.L. (2006). Do Some Business Models Perform Better than Others? MIT Working Paper 4615–06, Cambridge, MA: MIT Press.Google Scholar
  47. Mata, F.J., Fuerst, W.L. and Barney, J.B. (1995). Information Technology and Sustained Competitive Advantage: A resource-based analysis, MIS Quarterly 19 (4): 487–505.CrossRefGoogle Scholar
  48. Maule, A.J. (2010). Can Computers Help Overcome Limitations in Human Decision Making? International Journal of Human-Computer Interaction 26 (2/3): 108–119.CrossRefGoogle Scholar
  49. Mayer, K.J. and Salomon, R.M. (2006). Capabilities, Contractual Hazards, and Governance: Integrating resource-based and transaction cost perspectives, Academy of Management Journal 49 (5): 942–959.CrossRefGoogle Scholar
  50. Melville, N., Kraemer, K. and Gurbaxani, V. (2004). Review: Information technology and organizational performance: An integrative model of IT business value, MIS Quarterly 28 (2): 283–322.Google Scholar
  51. Miranda, S.M. and Kavan, C.B. (2005). Moments of Governance in IS Outsourcing: Conceptualizing effects of contracts on value capture and creation, Journal of Information Technology 20 (3): 152–159.CrossRefGoogle Scholar
  52. Montgomery, H., Lipshitz, R. and Brehmer, B. (eds.) (2005). How Professionals make Decisions, Mahwah, NJ: Lawrence Erlbaum Associates.Google Scholar
  53. Mooney, J., Gurbaxani, V. and Kraemer, K. (1995). A Process Oriented Framework for Assessing the Business Value of Information Technology. International conference on Information Systems, Amsterdam, NL: Association for Information Systems, 17–27.Google Scholar
  54. Morieux, Y. (2011). Smart Rules: Six ways to get people to solve problems without you, Harvard Business Review 89 (9): 78–86.Google Scholar
  55. Mosier, K.L. and Fischer, U.M. (eds.) (2011). Informed by Knowledge: expert performance in complex situations, Expertise, Research, and Applications, New York: Psychology Press.Google Scholar
  56. Muhanna, W.A. and Stoel, M.D. (2010). How Do Investors Value IT? An empirical investigation of the value relevance of IT capability and IT spending across industries, Journal of Information Systems 24 (1): 43–66.CrossRefGoogle Scholar
  57. Nagayama, K. and Weill, P. (2004). 7-Eleven Japan: Reinventing the Retail Business Model. MIT CISR Working Paper WP 338, Cambridge, MA: MIT Press, pp. 1–22.Google Scholar
  58. Nelson, R.R. (2005). Project Retrospectives: Evaluating project success, failure, and everything in between, MIS Quarterly Executive 4 (3): 361–372.Google Scholar
  59. Nevo, S. and Wade, M.R. (2010). The Formation and Value of IT-Enabled Resources: Antecedents and consequences of synergistic relationships, MIS Quarterly 34 (1): 163–183.Google Scholar
  60. Oh, W. and Pinsonneault, A. (2007). On the Assessment of the Strategic Value of Information Technologies: Conceptual and analytical approaches, MIS Quarterly 31 (2): 239–265.Google Scholar
  61. Piccoli, G. and Ives, B. (2005). IT-Dependent Strategic Initiatives and Sustained Competitive Advantage: A review and synthesis of the literature, MIS Quarterly 29 (4): 747–776.Google Scholar
  62. Quaadgras, A.L. and Weill, P. (2009). Globalizing IT Operations at BMW: Transparency and people, MIT CISR Research Briefing 9 (11): 1–4.Google Scholar
  63. Rai, A., Patnayakuni, R. and Patnayakuni, N. (1997). Technology Investment and Business Performance, Communications of the ACM 40 (7): 89–97.CrossRefGoogle Scholar
  64. Rai, A., Patnayakuni, R. and Seth, N. (2006). Firm Performance Impacts of Digitally Enabled Supply Chain Integration Capabilities, MIS Quarterly 30 (2): 225–246.Google Scholar
  65. Ravinchandran, T. and Lertwongsatien, C. (2005). Effect of Information Systems Resources and Capabilities on Firm Performance: A resource-based perspective, Journal of Management Information Systems 21 (4): 237–276.Google Scholar
  66. Robertson, D.C. (2003). ING Direct: The IT challenge. IMD Working Paper 3–1345, Switzerland: Lausanne.Google Scholar
  67. Ross, J.W. (1999). Dow corning Corporation: Case studies A, B and C. MIT CISR Working Paper WP 305, Cambridge, MA: MIT Press, pp. 1–43.Google Scholar
  68. Ross, J.W. (2001a). Delta.com E-Business at Delta Air Lines: Extracting value from a multi-faceted approach. MIT CISR Working Paper WP 317, Cambridge, MA: MIT Press, pp. 1–9.Google Scholar
  69. Ross, J.W. (2001b). United Parcel Service: Delivering packages and e-commerce solutions. MIT CISR Working Paper WP 318, Cambridge, MA: MIT Press, pp. 1–14.Google Scholar
  70. Ross, J.W. (2004). Project Governance at USAA, MIT CISR Research Briefing IV (1D): 1–4.Google Scholar
  71. Ross, J.W. and Beath, C.M. (2005). The Federated Broker Model at the Dow Chemical Company: Blending world class internal and external capabilities. MIT CISR Working Paper WP 355, Cambridge, MA: MIT Press, pp. 1–14.Google Scholar
  72. Ross, J.W. and Beath, C.M. (2007a). Agility and Risk Management at Pacific Life: Optimizing business unit autonomy. MIT CISR Working Paper WP 372, Cambridge, MA: MIT Press, pp. 1–13.Google Scholar
  73. Ross, J.W. and Beath, C.M. (2007b). Building Business Agility at Southwest Airlines. MIT CISR Working Paper WP 369, Cambridge, MA: MIT Press, pp. 1–14.Google Scholar
  74. Ross, J.W. and Beath, C.M. (2008). Campbell Soup Company: Harmonizing processes and empowering workers. MIT CISR Working Paper WP 374, Cambridge, MA: MIT Press, pp. 1–18.Google Scholar
  75. Ross, J.W. and Beath, C.M. (2010). USAA: Organizing for innovation and superior customer service. MIT CISR Working Paper WP 382, Cambridge, MA: MIT Press, pp. 1–19.Google Scholar
  76. Ross, J.W., Weill, P. and Robertson, D.C. (2006). Enterprise Architecture as Strategy, Boston, MA: Harvard Business School Press.Google Scholar
  77. Salancik, G.R. (1977). Commitment and the Control of Organizational Behavior and Belief, in B.M. Staw and G.R. Salancik. New Directions in Organizational Behavior, Chicago: St. Clair Press, pp. 1–54.Google Scholar
  78. Sallam, R.L. (2012). Survey analysis: Customers rate their BI platform ownership costs. Gartner research note (G00239667).Google Scholar
  79. Sambamurthy, V., Bharadwaj, A. and Grover, V. (2003). Shaping Agility through Digital Options: Reconceptualizing the role of information technology in contemporary firms, MIS Quarterly 27 (2): 237–263.Google Scholar
  80. Shin, N. (2006). The Impact of Information Technology on the Financial Performance of Diversified Firms, Decision Support Systems 41 (4): 698.CrossRefGoogle Scholar
  81. Sledgianowski, D., Luftman, J.N. and Reilly, R.R. (2006). Development and Validation of an Instrument to Measure Maturity of IT Business Strategic Alignment Mechanisms, Information Resources Management Journal 19 (3): 18–33.CrossRefGoogle Scholar
  82. Smith, H.A. and McKeen, J.D. (2008). Master data management: Salvation or snake oil? Communications of the AIS 23 (4): 63–72.Google Scholar
  83. Tallon, P.P. and Kraemer, K.L. (2007). Fact or Fiction? A sensemaking perspective on the reality behind executives’ perceptions of IT business value, Journal of Management Information Systems 24 (1): 13–54.CrossRefGoogle Scholar
  84. Tanriverdi, H. (2006). Performance Effects of Information Technology Synergies in Multibusiness Firms, MIS Quarterly 30 (1): 57–77.Google Scholar
  85. Tanriverdi, H., Rai, A. and Venkatraman, N. (2010). Research Commentary – Reframing the dominant quests of information systems strategy research for complex adaptive business systems, Information Systems Research 21 (4): 822–834.CrossRefGoogle Scholar
  86. Teece, D.J., Pisano, G. and Shuen, A. (1997). Dynamic Capabilities and Strategic Management, Strategic Management Journal 18 (7): 509–533.CrossRefGoogle Scholar
  87. Truman, G.E. (2000). Integration in Electronic Exchange Environments, Journal of Management Information Systems 17 (1): 209–244.Google Scholar
  88. Volkoff, O., Strong, D.M. and Elmes, M.B. (2007). Technological Embeddedness and Organizational Change, Organization Science 18 (5): 832–848.CrossRefGoogle Scholar
  89. Wade, M. and Hulland, J. (2004). Review: The resource-based view and information systems research: Review, extension, and suggestions for future research, MIS Quarterly 28 (1): 107–142.Google Scholar
  90. Wang, L., Gwebu, K.L., Wang, J. and Zhu, D.X. (2008). The Aftermath of Information Technology Outsourcing: An empirical study of firm performance following outsourcing decisions, Journal of Information Systems 22 (1): 125–159.CrossRefGoogle Scholar
  91. Weill, P. (2004). Don’t Just Lead, Govern: How top-performing firms govern IT, MIS Quarterly Executive 3 (1): 1–17.Google Scholar
  92. Weill, P. and Broadbent, M. (1998). Leveraging the New Infrastructure, Boston: Harvard Business School Press.Google Scholar
  93. Weill, P. and Ross, J.W. (2004). IT Governance: How top performers manage IT decision rights for superior results, Boston, MA: Harvard Business School Press.Google Scholar
  94. Weill, P., Soh, C. and Kien, S. (2007). Governance of Global Shared Solutions at Procter and Gamble, MIT CISR Research Briefing VII 3 A: 1–4.Google Scholar
  95. Weill, P. and Woodham, R. (2002). State street corp: Evolving IT governance. MIT CISR Working Paper WP 327, Cambridge, MA: MIT Press, pp. 1–11.Google Scholar
  96. Winter, S.G. (2003). Mistaken Perceptions: Cases and consequences, British Journal of Management 14 (1): 39–44.CrossRefGoogle Scholar
  97. Woerner, S., Weill, P. and McDonald, M. (2013). Turn Time into Money: Faster growth through digital reuse, European Business Review 25 (3): 38–42.Google Scholar

Copyright information

© Association for Information Technology Trust 2014

Authors and Affiliations

  • Anne Quaadgras
    • 1
  • Peter Weill
    • 1
  • Jeanne W Ross
    • 1
  1. 1.MIT Sloan Center for Information Systems ResearchCambridge, MAUSA

Personalised recommendations