Is it Really so ‘Strategic’? Motivational Factors for Investing in Enterprise Systems: A Survey

Is it Really so ‘Strategic’? Motivational Factors for Investing in Enterprise Systems: A Survey

Przemyslaw Lech (University of Gdansk, Poland)
Copyright: © 2013 |Pages: 10
DOI: 10.4018/978-1-4666-2464-1.ch016
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Abstract

This paper presents empirical research on motivational factors for investing in Enterprise Systems (ES), based on the survey conducted among project leaders. The results show that enterprises make investments in ES mostly to increase operational efficiency, provide managers with more accurate information and, which is interesting, to be able to continue the operations on the current level. Almost one third of examined enterprises indicated the replacement of an inefficient IT infrastructure with a new one enabling smooth operation of current business processes as the most important motivational factor for investments. The results of the research presented in this paper may help to understand the productivity paradox as they prove that many enterprises treat IT as a commodity rather than a strategic asset that generates significant business gains.
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Introduction

A lot has been said about the strategic role of information technology and its ability to create competitive advantage (see, e.g., Byrd et al., 2006; Clemons & Webber, 1990; Kaplan & Norton, 2004; Powell & Dent-Micallef, 1997). According to many authors, IT investments are supposed to be justified mostly if they enable the achievement of strategic goals (Benson et al., 2004; Kaplan & Norton, 2004; Powell & Dent-Micallef, 1997) or deep organizational changes (Ashurst & Doherty, 2003; Davenport, 1993; Ward & Elvin, 1999). Only then, say the mentioned authors, will IT investment lead to substantial value creation. This way of thinking about IT investment is well grounded in MIS theory and supported by case studies from practice (Dhillon, 2005; Lech, 2007).

On the other hand authors studying the ‘productivity paradox’ phenomenon (Dedrick et al., 2003) found no positive correlation between IT spending and firms’ profitability. Although such positive relationship was discovered between IT investments and labour productivity as well as consumer welfare (lower prices, better service) (Hitt & Brynjolfsson, 1996), the enterprises should rather be interested in increasing profitability or shareholder value.

The question arises, why all enterprises around the world still perform massive investments in IT if this does not yield to any of the above.

Porter (1980) pointed out, that under assumption that markets are effective, without substantial barriers of entry, no enterprise can gain the long-lasting competitive advantage as its temporary success would be soon copied by the competition. Following that conclusion Carr (2003) pointed out that as IT is a freely accessible good, and a way it is used by one enterprise can be copied by the others, competitive advantage gained with the use of IT will be temporary. Although Carr was criticized for lack of evidence for his conclusions, several other authors support the temporary nature of IT related competitive advantage (D’Souza & Mukherjee, 2004; Statopoulos & Dehning, 2000).

If the relation between the IT spending and firm’s productivity is ambiguous and the gain of competitive advantage through IT is rare, the questions arise, what makes the enterprises invest in IT and what are their expectations with regard to these investments.

To answer the above questions 28 Enterprise System implementation projects are examined in this paper to find out what motivational factors made the decision makers to undertake them.

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