IT Investment Consistency and Other Factors Influencing the Success of IT Performance

IT Investment Consistency and Other Factors Influencing the Success of IT Performance

Tomi Dahlberg (Åbo Akademi University, Finland & University of Turku, Finland), Hannu Kivijärvi (Aalto University, Finland) and Timo Saarinen (Aalto University, Finland)
Copyright: © 2017 |Pages: 33
DOI: 10.4018/978-1-5225-0861-8.ch007


IT Business Value (ITBV) research generally proposes that various “good” IT governance and management practices influence positively IT performance. Yet, this claim has proved hard to verify with empirical data. In this study we first identified and analyzed factors that are seen to influence IT deployment success, then hypothesized about the relationships among and between these factors and finally integrated the hypotheses into a research model. We then empirically evaluated the hypotheses and the entire research model. The consistency of IT investments as the response to the cyclical behavior of the economy is a novel factor introduced in this study to the ITBV research. Special attention was also placed on the perceived importance of IT to business, business-IT alignment and IT management. We used survey data of 212 responses collected from CxOs during an economic recession to test the hypotheses and the model for path coefficients and indirect effects. Empirical results confirmed that all research model factors influenced positively IT deployment success. Moreover, high values in the perceived importance of IT, business-IT alignment and the quality of IT management were discovered to be antecedents to the consistency of IT investments, and when that was achieved, the impact was positive on IT deployment success.
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1. Introduction

During the recent decades the relationship between information technology (IT), IT performance and organizational performance has been studied extensively. There appears to be several reasons for this. In addition to the ever-expanding deployment of IT in organizational activities, IT-related investments are seen to account for a major and growing proportion of an organization’s investments. For example, Gartner Inc. estimated recently that the proportion of IT investments outside of IT would grow to 90% of all investments in technology by the year 2020 from the proportion of 20% thirty years earlier (Gartner Inc., 2012). According to Gartner Inc. much of this change “is being driven by the digitization of companies’ revenue and services”. Moreover, direct and especially indirect IT and digital data related costs are seen to represent a growing proportion of an organization’s total costs (e.g. Cha, Pingry, & Thatcher, 2009). With IT we understand anything related to computing and data processing technologies, information systems (IS) and digital data processed with these technologies and systems, such as hardware, software, networks, the Internet, data storages and data analytics, as well as the facilities, people, processes and organizational structures needed to deploy, use, manage and govern these technologies and systems as well as digital data processed with them.

There are arguments according to which IT does not provide value to organizations (Carr, 2003) or fails to offer positive competitive advantages to them (Porter, 2001; Pollalis, 2003). Yet, most practitioners as well as economists and strategy researchers agree with statements that, on average, IT deployment is able to improve organizational performance and to increase the relative competiveness of an organization (e.g. Brynjolfsson, & Brown, 2005; Wiengarten, Humphreys, Cao & McHugh, 2013). This view is also inherent in research traditions, which investigate how IT investments, IT assets as well as their deployment and management impact IT success and organizational performance. The mentioned research traditions are often labeled as IT business value (ITBV) research (e.g. Kohli & Grover, 2008; Schreyen, 2013) and as IS success research (e.g. Petter, DeLone & McClean, 2013). For simplicity we refer to both with the term ITBV research. “Good” adherence of so-called “best” IT management practices resulting, for example, in business-IT alignment with active business management involvement and in IT governance arrangements with clear accountabilities for IT decisions and processes are seen to contribute both to the success of IT deployment and to the achievement organizational performance benefits (e.g. Weill & Ross, 2005; Van Grembergen & De Haes, 2008).

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