Assessing the value of strategic information technology investments

  • Brian L. Dos Santos


Today, information technology (IT) is extremely important to the smooth operation of many organizations. Firms in many industries would be seriously affected if their IT-based systems failed even for short periods. In addition to being important to operations, IT-based systems are just as important in the control and planning functions (Bruns and McFarlan, 1987). There now is a growing awareness that IT investments can be of strategic importance to a firm, that is, IT investments can improve a firm’s competitive position or allow the firm to become more vulnerable to competitive forces (Parsons, 1983; Benjamin et al., 1984; Cash and Konsynski, 1985; Clemons and Row, 1988). The list of publicized cases where IT investments have enabled firms to gain a competitive advantage includes investments by such firms as American Airlines, American Hospital Supply Corporation, Avis, Bank America, Citicorp, Digital Equipment Corporation, and General Electric (Cash and Konsynski, 1985; Ives and Learmonth, 1984; Porter and Millar, 1985; Strassmann, 1988; Wiseman, 1985).


Call Option Development Cost Exercise Price Discount Cash Flow Discount Cash Flow Model 
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© Leslie Willcocks 1994

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  • Brian L. Dos Santos

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