Business Informatization Level

Business Informatization Level

Ronaldo Zwicker (University of São Paolo, Brazil)
DOI: 10.4018/978-1-60566-026-4.ch073
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Abstract

IT diffusion is central to the new economy and is reflected in a process of informatization of society and businesses. Although initially coined to represent the diffusion and adoption of information technology (IT) in all levels of society, the term informatization is also employed to represent the use of information technology resources in organizations. Weissbach (2003), for instance, defines informatization as being the process of gradual and increasing application of “planned and systematic use of IT penetrating the organization’s functions”. As pointed out by Lim (2001), the evaluation of an organization’s Informatization Level (IL) is an important managerial concern. The author also points out the difficulties associated with this evaluation, stating that “this is not a simple problem because informatization includes many intangible factors such as the quality of information and the organization’s culture”. The purpose of evaluating a company’s IL is to provide information for the organization to improve precisely its informatization level. It is also a means of benchmarking the efficacy and efficiency of IT investments in order to set up the baseline for improvement. This topic depicts a measurement method for the IL of companies and shows results of its application in 830 Brazilian industries (Zwicker, Vidal, & Souza, 2005). The development of this method was based on the principle that IT results in companies are not obtained merely through investments and the implementation of systems but rather through its proper use in business processes. The proposed method extends the informatization dimensions proposed by Lim (2001), using the process-based view of the IT business value creation model proposed by Soh and Markus (1995) and the concept of “information systems coverage” proposed by Ravarini, Tagliavini, Buonanno, and Sciuto (2002).
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Background

Accordingly to Hu and Quan (2005), there are four main visions in studies focusing the creation of IT business value through the use of the technology: the macroeconomic view, that believes that IT creates excess returns over other types of capital investments; the process-based view that believes that IT investments create competitive advantages by improving operational efficiency of intermediary processes; the resource-based view, that believes that IT investments create sustainable competitive advantage via unique, immobile, and path-dependent strategic resources and capabilities; and the digital option view that argues that IT investment creates values by giving options and flexibility for firms. Since the study is focused on the organizational level, the second and third views (process- and resource-based) are deemed more adequate.

Soh and Markus (1995) present a model that synthesizes concepts of other studies that also incorporate the process-based view (Grabowski & Lee, 1993; Lucas, 1993; Markus & Soh, 1993). Figure 1 represents the sequence of events and results associated to the process of obtaining organizational benefits from IT investments, according to this model. To obtain an improvement in the organization’s performance by means of IT requires that IT impacts occur in the intermediary processes of the organization. However, the fact that impacts from intermediary processes were obtained is not sufficient to obtain organizational performance improvements, since this depends on external factors, such as the economic context and competition. These aspects comprise the “competitive process” of the model and must consider the requirements of the competitive dynamic in which the company is inserted.

Figure 1.

IT and business value creation (Soh & Markus, 1995)

Key Terms in this Chapter

Informatization Level Dimension: Conjunct of relevant aspects that participate in the informatization process and that are in some way related.

Informatization: Managed process by which an organization continuously expands its IT assets and extends and deepens their appropriate use.

IT Conversion Effectiveness: The capacity of converting IT investments into IT assets.

IT Business Value Creation: The process of obtaining organizational benefits from IT investments.

Informatization Level: An assessment of the effectiveness of the organizational use of IT.

Informatization Level Model: Elements and relationships that structure the informatization level of a company.

Information Systems Coverage: Extension of use, degree of dependency and adequacy of the information systems that a company owns.

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